It might make better financial sense to rent compared to buying a house in Whatcom County if you plan on living here fewer than seven years, according to a new report.
SmartAsset calculated whether it is better to rent or buy a home in counties across the U.S., based on the number of years you plan on staying in your home.
In Whatcom County, the break-even point – when the total cost of renting becomes greater than buying – is 6.4 years.
The county’s break-even point was the second longest among Washington’s 39 counties – the longest was in San Juan County, at 8.3 years. Even in King County and its red-hot home-buying market, you’d wait only 5.1 years to break even. At 2 years, Grays Harbor County had the shortest break-even point in the state.
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Living on the West Coast typically meant waiting longer before a homebuyer would break even, said AJ Smith, vice president of financial education for SmartAsset.
A longer break-even period can have an impact on home-buying decisions.
For example, out-of-town parents of Western Washington University students will sometimes consider buying a small condominium unit or house for the four years the student is in school, but then come to realize it makes more sense to rent, said Darin Stenvers, branch manager of the Bellingham John L. Scott office.
What about the equity you can build by owning a home, even if it is for a short period? SmartAsset points out that homes don’t always retain value or appreciate. Case in point: the 2007 housing bubble.
“A house, it turned out, could lose value – and, as some real-life cases demonstrated, could do so in spectacular fashion,” the report stated.
The website is correct in reminding people that home values don’t always appreciate, and it is not always as obvious as when housing bubbles burst, said Hart Hodges, director at the Center for Economic and Business Research at Western Washington University.
For example, if a home’s value goes up 2 percent in a year but inflation rises 3 percent, in a real sense the homeowner is dealing with depreciation.
Hodges said that for a more accurate reading, people should look at their specific situation rather than market averages. That includes looking at the price of a specific house they might want to buy and comparing it to a place they want to rent. Other individual factors include the credit score of the buyer/renter and closing costs from specific lenders.