Raleigh Relocation Information Center - Moving To the Triangle?

Renting vs. Buying

Trulia Offers Rent vs Buy Calculator

Here's What You Should Know Before You Use It!

Trulia is focused on promoting their Rent vs. Buy Calculator.

Here's some things to think about:

$8,000 Homebuyer Tax Credit

The calculator does not take the $8,000 Homebuyer Tax Credit into account.  This can make a big difference, particularly if you would have had to dig into savings (or use a credit card!) to pay your tax bill without the credit. 

Record Low Interest Rates

Be sure to change the default interest rate from 6% (which was much more standard a year ago!) to today's rates, which can be as low as 4.75%, or possibly lower!

Accurate Property Tax Rates

Enter an accurate property tax rate amount.  Check our easy guide to Triangle NC Property Tax Rates here.  Many areas are much lower than the default rates.  And remember, the property tax rate depends on the ASSESSED value, not the sales price of the home. 

Property Taxes - Easy Guide to the Cheapest (and Most Expensive) Places to Live in the Triangle!

Annual Maintanence Cost

The annual maintanence cost will be very low on a new home (particularly with a solid, reputable builder and a full warranty), and could be much higher on a resale home.  An easy solution could be to ask for an extended warranty, which can cover the cost of replacing the air conditioner, heater, etc and limit higher expenses. 

Consider a 15 Year Loan

Want to reduce the amount of interest you'll pay?  Consider a 15 year loan.  Your monthly payments will be a bit higher, but the amount of interest you'll pay over the life of the loan will decrease significantly.  Try an amortization calculator to see the difference.

Owning a Home

One more thing to consider - the calculator doesn't really show that at the end of 15 years, or 30 years, you will OWN a home, which you can then live in rent- or mortgage-payment free, or even rent out for additional income. 

Just a few things to think about when using a calculator!  Want to try it?

Trulia Rent vs Buy Calculator

You may also be interested in these popular articles:

Jobs in the Raleigh Area

Triangle Area Market Reports - How's The Real Estate Market in Raleigh?

Shopping in the Raleigh Area - What Kind of Shopping Is There?

Raleigh Relocation Package - All About the Raleigh Area!

Which Part of the Triangle is Cheapest to Live?  Property Tax Guide

If you're planning a move to the Raleigh area, you're probably asking yourself this question: Buy now, or rent for 6 months or a year and gamble that prices will go down? 

There's more to consider than just the price of your new home.

How much will it cost in terms of personal adjustments?

• How hard is it to find the kind of home and neighborhood you're looking for? 
• Will the kids need to adjust to a new school, church, friends, and then have to do it all over again right after they've settled?

How much will temporary living arrangements cost in terms of cold, hard cash?

•·         Renting a Raleigh area 2 bedroom, 1 bath, 900 sq ft apartment at $800 per month (a bargain, bare-essentials home) - $9600 over one year.

•·         If renting a 3 bedroom, 2 bath house in the Triangle, average rent is at least $1200 per month. That's $14,400 over one year's time, plus the extra moving costs and any nonrefundable deposits. 

•·         Renting a storage unit to store excess household goods from your previous home - $1200 (for a small unit) over one year.

•·         Paying for a second U-Haul (economy do-it-yourself) to move from your temporary apartment to the home you eventually purchase - $300. (You'll need to move all your belongings from both the apartment and the storage unit - also be prepared to pay for pizza and beer for the group of friends that helps you move - again - or add an additional several hundred to thousands of dollars for professional movers.)

•·         Did you pack away too much? Add the cost of buying all the stuff that's "somewhere" in the storage unit - dishes, furniture rentals, seasonal clothes...

How much will that new home cost if you wait a year to buy?

• Probably more than you think.
• Average annual home appreciation in the Triangle for a home is about 6%, including the most recent totals for 2007.  Sales are slower, but homes are still appreciating, as they have been, slowly, steadily and predictably, over the past 5 years. 
• According to the Office of Federal Housing Enterprise Oversight, national appreciation over the past five years is 28.5% - about the same as the Triangle. 

It's places like San Jose, CA, that are seeing the downward trend you've been hearing about - and since they've had a 5 year appreciation rate of 87.3% - it's not surprising that home prices there are now correcting.   

Overall U.S. numbers in the 3^rd quarter market reports show that home values have a 1.7% decline from last year. This is represented mainly by problems in the Michigan, California, Arizona, and Florida markets - where home prices had increased to nearly double the levels of 5 years ago, and now are correcting.

Let's look at some different scenarios.  After all, we don't know what's going to happen in the real estate market - but we do know that the Triangle market has not overinflated, that jobs are plentiful, and that thousands of newcomers continue to move here. The Raleigh/Durham/Chapel Hill area remains a top destination, for people wanting great jobs, climate, recreation, education, and people-friendly culture. 

If Triangle homes continue to appreciate at the slow, steady average rate of 6% that they have over the past 5 years - that $250,000 home will cost $265,000 a year from now.  You'll have spent about $11,000 on rent (for that small apartment,) have one less year paid down on your mortgage, and your new home will now cost you $15,000 more than it did one year ago.  If you had bought when you first moved, you'd now have $15,000 equity in your home, along with a year's worth of payments on the mortgage.   

If Raleigh area home appreciation slows down to a mere 2% - less than the annual inflation rate - that $250,000 home will cost $255,000 a year later.  If you decided to rent an apartment and wait and see, you'll have lost a year paying down on your mortgage, spent $11,000 on rent, and your home will cost $5,000 more than it did a year ago.  If you'd bought immediately, you'd have $5,000 in equity, plus again a year's worth of payments.

Worst case (and none of the current trends in the region point this way) - suppose that homes actually depreciate by 2% in the Triangle.  This would mean a unlikely downswing of 9% from last year's 7% appreciation rate - in a market area with lots of movement and lots of buyers.   In this scenario, the home that was worth $250,000 last year is now worth $245,000, or $5,000 less. 

You can save $5,000 on the cost of your new home! Although, of course, you're down another $6,000 on top of that for that $11,000 you spent on an apartment and storage. Not to mention packing, moving, and unpacking the entire household and helping the family adjust a couple of times in one year - and putting your back out (or owing a lot of people who pitched in) carrying those dressers and armoires up and down those stairs.

What other issues should be taken into consideration?

•·         Renting means first and last month's rent, plus a security deposit, or about $2100 upfront for an $800 per month apartment. 

•·         Can your family adjust to the smaller living space of an apartment, along with the dual adjustments to new friends, school, church, neighbors?   

•·         Are you okay with people living on the other side of the wall, overhead, underfoot, and the come-and-go varying hours?

•·         Does the complex have a limit on parking?  How many spaces do you get?  Covered or uncovered?  Is there room for guests?

•·         Can you get on calendar at the apartment complex to use the entertainment facilities when you have social gatherings?

•·         Do you have a pet?  Does the complex care? Don't forget the pet deposit.

•·         You'll have to contact and set up phone, internet, water, garbage, power, and natural gas twice within a year.  Some utilities require deposits for each location. 

What else can you save if you buy now?

• Motivated sellers may be willing to help with closing costs.  This could save you about $5K.

•·         Builders are moving through their excess inventory right now - and are slowing down on new starts, as well as getting more stringent with presales.   The deals that have been out there for the past few months in the Raleigh area are going to fade away, because scrupulous builders don't make that much profit to begin with, and they can't stay in business if they're giving homes away.

•·         The supply of homes in the $200-300K range is actually very low in most locations throughout the Triangle.  Some other price points have higher inventory and thus more room to negotiate.

Take your time, do your homework, use an agent.  Measure costs and savings, both in dollars and peace of mind.   And buy when the home, the neighborhood, and the value feels right.

You may also be interested in these popular green building topics:

Green Home Building in the Triangle

What is a Green Home?              

What Is Geothermal?  Geothermal News and Information

Passive Solar Homes and Ideas