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Housing market: to rent or to buy?

Updated: May 13, 2021

2021 is unfolding and many of us are returning to the pressing question of buying vs renting a home. It’s a tantalizing opportunity to buy a house, but are we reaching out to grab a branch on a cliff?

Hundreds of thousands of Indians are all pondering this same question: Should I buy a home this year?

We’ve all had the value installed in us that owning a property is a smart wealth creation strategy. And given you can incorporate a rentable unit in your house, buying a house does a common sense conclusion.

But is buying in the next 2 years really a wise decision? Is this housing market one you want to jump into? And are purchasers really weighing the right criteria and respecting the wrong data? Is fear of missing out (FOMO) what’s really driving most home ownership for Millennial first time buyers?

In many states/cities homes are really out of reach for most buyers. And although low mortgage rates are the rule now, it’s a certainty that inflation will drag them upward. When home prices peak, what are the odds they will keep climbing?

The year 2021 will bring more changes to the rental markets. And rent prices will likely climb, especially for townhouses and single-family homes. The dream of having one’s own home, building equity, and enjoying stability is alluring.

Yet a number of factors can make buying a house a risky option. Job insecurity, lack of ideal home listings, high down payment, high home prices, and stringent mortgage qualifications will make buying a difficult choice, even for those wanting to rent out the basement.

Future job loss and unemployment periods raise the specter of losing your investment entirely. It happened in 2008/2009.

Renting Still More Affordable for Most

For those with high financial resources, buying is better than renting. Yet for those building toward a purchase renting does seem more sensible.

While house prices are rocketing, in general, rents aren’t. This should allow renters to save more money in 2021/2022 to allow them to afford a better home in 2023. Construction starts will grow post-pandemic and prices should moderate.

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