Buying a House vs. Renting: Pros and Cons, How to Decide

Buying a House vs. Renting: Pros and Cons, How to Decide


There is no wrong answer when you're deciding whether to buy a home or rent a home. Each approach is built for different lifestyles, budgets, and financial goals. Whether you want to set down roots and buy a home or rent for a while until you know this area feels like home, taking a closer look at the Avery Ranch, TX, real estate market is worth your time. Avery Ranch is just 20 minutes away from the middle of downtown Austin, and this northwestern suburb is home to houses across a wide range of price points and rental terms. Start your journey by looking at the current particulars of the market, and then ask yourself four questions in this quick overview. No matter which decision feels right to you, Erin Morrison can help you explore the market and find the right home on your terms.

A quick look at Austin's current buying and renting markets

Austin's housing market has seen a steep climb over the past several years. The typical monthly mortgage payment for a home today is $2,748 in Travis County, compared to $1,683 a year ago. While this surge in price can make you feel hesitant about buying, there is some potential relief. NAR measured a -13.5% appreciation rate in the median home price in Q1 of 2023. What does this mean for prospective buyers? The market could be seeing a correction after the past couple of years of high demand and value increases. Now could be the perfect time to find a home at a more reasonable price, especially as the peak summer buying season comes to a close. Your realtor can help you compare pricing in different neighborhoods across the past few quarters or even compare on-market properties against similar homes that recently sold so you can decide if now is the right time to buy.

Of course, the Austin rental markets have seen similar increases in pricing over the past several years. Inflation, low housing inventory, and limited landlord restrictions on setting or raising prices have made monthly rents skyrocket for many tenants, though rates may be decreasing. This paints a promising picture for both prospective buyers and prospective tenants. You may be able to find a more affordable rental home or purchase than you would have anticipated just a year ago. While Austin is still seeing incredible demand and market growth, the surrounding suburbs are quickly building up to meet demand, with neighborhoods like Avery Ranch providing beautiful homes with easy access to the city.

How to make the right choice between buying or renting

Market forces across the Austin and Avery Ranch, TX, real estate markets aren't the only factors that will shape your decision. Ask yourself these four questions to compare buying and renting.

1. How long do you want to live in Austin?

Buying a home is typically a long-term decision. While the housing market is growing, no one can guarantee that that trend will continue and your home will see the same appreciation in the short term. Instead, many realtors and financial advisors look to the "five-year rule." Generally speaking, you can gain enough equity in a home over five years to make the transaction profitable. This rule of thumb considers closing and selling costs, the costs of homeownership, and fluctuating appreciation and economic factors.

If you plan to stay put for at least five years, homeownership is likely a great decision. But if you're on the fence or know you plan to move, renting a home with a long lease term, a reasonable rent price, and caps on increases year after year may be the better option.

2. What is your current budget and your future anticipated budget?

Finances also play an important part in deciding what type of housing works best for you. Remember, the typical monthly mortgage in Austin is $2,748, and most lenders will require a debt-to-income ratio of 45% or lower. How does that calculation work? Suppose your mortgage is your only debt, with no student loans, car payments, or other types of debt. For lenders to approve the deal, you would need a monthly income of at least $6,106.67. If you have other forms of debt, such as a $500/month car payment and $1,000/month student debt payments, your household must have a monthly income of at least $9,440.

For the median Austin home (at $467,900), you also need a down payment. For a conventional mortgage with 20% down, you'll need $93,580 and approximately $4,679 for closing costs.

Rental prices also have strict income requirements but require less cash upfront. Many property management companies and landlords require you to make at least 2.5x or three times the rent to qualify. So a $2,000 monthly rent requires approximately $6,000 of household income. You may also need to put down one or two months of rent at the start.

3. Does owning a home fit your lifestyle?

Set aside the financial practicalities and consider your lifestyle preferences. Do you like to travel? Do you have pets? Is accessing a particular school district or living near specific recreational amenities a priority? You may not want to manage the repairs and maintenance costs that homeownership demands or you might look forward to the freedom it provides. 

4. Have you toured Avery Ranch homes for lease and for sale to see what feels right?

Once you've weighed different factors and looked at your savings, the next step in making your decision is to explore the different rental and for-sale homes on the market. Avery Ranch is a master-planned community in the northwest area of Austin, and it offers luxury homes for both sale and lease. You can see the different amenities, home features, and lifestyle factors for yourself by booking a showing in the various homes or visiting open houses. This can help you better understand which option is right for you — now and in the future.

Work with a realtor who helps you access both options — schedule a meeting with Erin Morrison, your Avery Ranch realtor

Whether you want to rent, want to own, or want to consider your options a bit more, Erin Morrison is here to help. She offers local insights into the Austin area market and can guide your journey through some of Austin's beautiful homes. Schedule a meeting today to discuss your short-term and long-term plans, what you'd love to see in your next home, and how we can help you find the right fit.

*Header photo courtesy of Shutterstock


WORK WITH ERIN

As your real estate agent, Erin Morrison is committed to making the home buying and selling process as smooth as possible. She will listen to your needs and criteria in finding you your “Dream House” and will be dedicated to keeping you informed throughout each step.

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