Better to Rent or to Purchase?

Q:  Marsha, my fiancée and I are discussing housing options in Santa Barbara. We are in our early thirties and have well-paying jobs. We’re trying to decide whether to rent or purchase a home. Homes seem so unbelievably expensive. What are your thoughts? Should we rent or buy?

A:  As a real estate broker, my instinct is to shout, “Of course you should purchase a home!” However, there are factors to consider. 

First, how long do you plan on staying in your home? If your Santa Barbara sojourn is only a year or two, incurring the expense of a home purchase doesn’t make sense. Costs to purchase the home will include the down payment, home inspections, appraisal fees, and myriad other home-buying expenses. As a renter, your worst expense is an application fee and refundable security deposits. 

Also, renting offers you mobility. If you’re not happy with the neighborhood, you give the landlord your 30-day notice and you’re gone. There’s also less responsibility. A renter has little or no obligation for caring for the property. When your toilet backs up on Sunday, all you have to do is call the landlord. 

There are great reasons to buy, too! If you plan to stick around the area, you should consider buying. There are tax benefits of home ownership. Homeowners deduct their property tax bills and mortgage interest payments from their taxable income. It can be a significant savings. The tax benefits mean more money in your paycheck every month. Please discuss this with your CPA to know your actual benefit. Add to this the prospect of financial stability and long-term appreciation, and home ownership starts to look pretty good. Many people also feel a strong pride of ownership when they own and love the effort they put into making their house a home.

All real estate is local, and Santa Barbara is a unique community. Housing values have always felt high. I recently spoke with a Santa Barbara Realtor who started selling in the 1960s. He told me about one of his biggest career regrets. Many years ago, he was showing San Roque homes to a young couple who were new to the area. They wanted to purchase a home that was offered for $32,000. He considered that an outrageous price and counseled them to wait for a price reduction. That never happened, and the couple never purchased a home in Santa Barbara.

This is one of the biggest financial decisions of your life. There are so many factors to consider: interest rates, current market values, how long you plan to stay in your home, and the level of flexibility you want are just a few. 

You and your partner should weigh the pros and cons of a Santa Barbara purchase and decide what makes the most sense in your life and circumstances. 

Marsha Gray, DRE #012102130, NMLS#1982164, has been a real estate broker in Santa Barbara for more than 20 years. She works at Allyn & Associates, real estate services and lending. To read more Q&A articles, visit MarshaGraySBhomes.com. She will research and answer all questions submitted. Contact Marsha at (805) 252-7093 or MarshaGraySB@gmail.com.