If you’re looking to make a move in the real estate market, an important question you might be wondering is should I rent or buy a home in Evansville? See the costs associated with both avenues below.
Percentage of Median Income
One of the easiest ways to analyze the cost comparisons between renting and buying a home in Evansville is to look at the differences in median income required for monthly payments. If you look back over the past few years, there has been a steady trend showing that purchasing a home is indeed less expensive than renting. Renting a home in the past required roughly 25% of median income compared to the 21% required to purchase. Now in 2019, statistical reporting shows that the percentage required to rent has increased by nearly 3% for a final percentage of roughly 28%. This increase isn’t drastic at first glance, but the savings are significant when you compare with the percent change seen in the home buying market in Evansville. Unlike the rental market, the percent of median income required to purchase a home has actually decreased by about 3% for a final percentage of 18%. Just like before, 3% doesn’t immediately sound like a huge difference, but you have to analyze both pieces of the puzzle to see the full effect. If you ultimately decide to buy a home, you’re looking at an overall differential of 10%, meaning you’ll need about 10% less of your median income to purchase than you would if you chose to rent. If you’re still asking yourself should I rent or buy a home in Evansville, a 10% difference in cost should definitely grab your attention.
To further hammer the point home and settle the debate of whether you should rent or buy a home in Evansville, let’s run through a real life scenario. Check out the sample calculations below:
Percent of Median Income Required to Rent: 28%
Percent of Median Income Required to Purchase: 18%
Median Income: $50,000
Monthly Rent Payment
x 0.28 (28%)
= $14,000 ÷ 12 months = $1,166.67
Monthly House Payment (after Purchase)
x 0.18 (18%)
= $9,000 ÷ 12 months = $750
$1,166.67 – $750 = $416.67 per month x 12 months = $5,000.04 per year
Wouldn’t you like to have a spare $5,000 each year? We sure would! It’s exciting to think about all the financial possibilities that would open up in just one year, but the real money lies in the life of your mortgage. If you obtain a standard 30-year mortgage, by the end of it you’ll be saving just over $150,000 when compared to renting for that same 30-year period. It’s a no-brainer!
Constants and Assumptions
If you’re still trying to decide whether or not you should rent or buy a home in Evansville, it’s important to keep in mind a few assumptions and constants. The math example above assumes that interest rates will remain constant throughout the year. It’s also important to note that every market is different. Although these statistics hold up strongly in our Evansville market, they may not hold as much weight somewhere else in the country. If you’re planning on relocating, research the housing market to see whether you should rent or purchase your home. That being said, it’s almost always the case that purchasing is significantly less expensive than renting.
At the end of the day, whether you decide to rent or buy a home, you’re going to be paying someone’s mortgage—why not make it your own to reap the savings and benefits?
Statistical Source: Pulsenomics
Photo credit: Home Water Softener Reviews