Rent Vs Buy

With seasons changing maybe you are considering a change?
Should you continue to rent a home in 2017 or is it time to buy? There are a variety of factors that go into the decision, but here's a big one: Historically low mortgage rates.

Generally, the more time you plan to live in a home, the more sense it makes to buy. If you have just moved to a community, renting — at least initially — may be a better option as you get to know different neighborhoods. Another factor: Your job. How stable is your employment? Buying could make more sense right now if you aren’t thinking about switching jobs, your employer is not reducing its workforce or if your company isn’t planning to move you to a different city or state.

Another way to evaluate the rent-versus-buy decision: The U.S. Breakeven Horizon, compiled by real estate website Zillow.com. This analysis is designed to provide an estimated number of years one needs to live in a home for buying to make more sense than renting. Factors such as expected growth in rents and home values, price-to-rent ratios and mortgage interest rates are included in the analysis. Nationally, that figure is 1 year and 11 months. For a look at the Breakeven Horizon in the area you are thinking of buying, go to this link.

While a variety of factors may sway the buy-versus-rent decision, there’s one that’s tipping the scales toward buying a home in a big way: Historically low mortgage rates. Take a look at average mortgage rates since 1971 and you’ll see that today’s rates are extremely favorable. Low mortgage rates help families stretch their home buying dollars. Questions about whether buying a home is the right choice for you and your family? We’re here to help.

Fed Keeps Interest Rate Steady, Preserving Job Growth

The Federal Reserve announced on Thursday that it is keeping its benchmark interest rate at or near zero, allowing job growth to continue unhindered.

The Fed’s federal funds rate -- the interest rate the Fed charges for banks to lend to one another overnight -- will remain at target rate of 0.0-0.25 percent, where it has been since December 2008 at the height of the financial crisis. The Federal Open Market Committee (FOMC), the central bank body charged with adjusting key rates, will have its next chance to adjust the influential interest rate when it meets again on Oct. 27 and 28.

By leaving the key interest rate untouched, the Fed is deliberately maintaining economic demand by preserving the current low cost of credit for consumers and businesses. If the Fed had raised rates, it would lower demand for goods and services, which in turn would reduce demand for workers and slow job growth. Fewer available jobs means less competition for workers, limiting wage growth.

The decision to postpone a rate hike was not unexpected. Some Fed officials have been indicating for weeks that fears about China and other emerging markets that spurred August’s stock market losses were giving them pause about a September rate hike. William Dudley, president of the Federal Reserve Bank of New York, expressed those concerns in remarks he made on Aug. 26, calling a September rate hike “less compelling” than it had been in the weeks prior.

The news will likely reassure anxious investors and prompt stock prices to rise. It guarantees another month without more expensive credit and the dampening effect it would have on trading, however minimal. 


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The Easterbrook Team
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John Easterbrook & Patty Aguon


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