Owning a home has long been a part of the American Dream and for many years, considered one of the wisest investments a person could make. It was traditionally more expensive than renting when one added in the taxes and insurance costs, but many felt the income tax incentives and potential to grow one’s equity outweighed the additional monthly expense.
Over the course of the housing crash and consequent bubble, the tables have begun to turn and it is now the opinion of many in the industry (present company included) that owning a home in Western Massachusetts and beyond, is often more affordable than renting.
During my morning commute in Westfield, MA today I heard a great interview on “Marketplace” where Fortune magazine’s Allan Sloane was interviewed about this very topic.
Sloan said, ” Well right now, the price of owning the average house is lower than the average rent, which is a relatively recent phenomenon.”
So how do those numbers work out in Western Massachusetts? Well, for comparison sake, let’s say the rent on an average 2 bedroom apartment in Westfield, MA rents for $850 a month. How much would a home in that same area cost per month?
Here are a couple of examples:
If this single family home in Westfield, MA was purchased for $84,900, down payment of 3.5%, assuming interest rate of 5% over 30 years fixed this is the estimated payment schedule:
Payment Summary
Principal & Interest: $439.81
Taxes: $154.00
Insurance: $50.00
Total Monthly Payment: $643.81
That demonstrates a SAVINGS of more than $200 per month for OWNING instead of renting!
Let’s do one more!
This time we are looking at a two family home for sale in Westfield, MA. If we purchased this property for $149,000, down payment of 3.5%, assuming interest rate of 5% over 30 years fixed this is the estimated payment schedule:
Payment Summary
Principal & Interest: $771.87
Taxes: $177.83
Insurance: $83.33
Total Monthly Payment: $1,033.04
I know what you are saying now…”But, Lesley…that is MORE than the $850 rental example you gave!”. Yes, but remember, this is a TWO FAMILY HOME. Assuming you can get that estimated $850 a month in rent from a your tenant that now makes your net monthly expense only $183.04 per month for a total savings of $666.96 per month!
Each circumstance is unique, so your savings might be less or might be more, but if you are currently renting then might I suggest NOW is a really great time to investigate buying? Wouldn’t you like to save some money each month and at the same time begin growing your investment and equity?
I would love to help you get started! Lesley Lambert of Park Square Realty in Westfield, MA 413-575-3611. I cover all of Western MA and have 23 years experience in assisting the first time home buyer!
The homes used in this example are not represented by me and these figures are estimates used for our example only.
