Should I Buy a House Now or Wait?
Buying a home for the first time is incredibly intimidating. It requires making a major commitment, changing up your life, and putting down a couple thousand dollars. Rent, on the other hand, often seems like the easier choice. You put down a small deposit, a landlord takes care of repairs, and it seems way less stressful.
But the reality is that renting is NOT doing you any favors. Besides the fact that your money is not going towards any sort of investment in your future, it is also draining 30-50% of your monthly paycheck. The average rent in Austin specifically is around $2,000 per month for a two bedroom place. This average increases by around 4% every year, which is double the national average. Almost every year you sign your lease, your rent increases. Little by little, you are paying more and more a month.
Buying on the other hand, makes a lot more sense financially. Yes, you are still making monthly payments, which are often similar to the price of rent, but they are fixed payments every month. Also, that money is going towards your very own house rather than making someone else’s mortgage payments. Rent is truly just money you’ll never see again, and if you broke down how much you’ve spent in rent in your life, it could make you cry. So this begs the question:
Should You Buy a House Now or Wait?
Celeste’s Apartment
To show you a real life example, we asked our Director of People & Operations, Celeste, to break down her 11 years of paying rent in Austin. We then calculated what the difference would have been if she purchased a home from the get-go.
Would she have spent the same amount of money? Would she have saved? Would her life be better now if she bought 11 years ago? Let’s see the numbers.
Celeste’s Rental history
Celeste has lived in Austin for 13 years. Throughout this time she has rented 5 different places (1 being a UT dorm), and spent a pretty wild amount on rent. Here is the break down of where she lived, when she occupied each space, and how much it cost her:
2007-2009: Lived in the dorms at UT - (paid by grandparents)
2009-2010: Over-corrected and got a 1 bedroom apartment at the Triangle - ($1,500/month x 12 = $18,000)
2010-2012: Moved south to live with boyfriend - ($900/month x 24 = $21,600 or $10,800 per year)
2012-2017: Moved into a family friend’s duplex and stayed for 5 years - ($1,150 x 60 = $69,000 or $24,500 per year)
Celeste’s landlords lived in other side of the duplex and used her rent to help pay their mortgage. During this time, they were able to buy another duplex with the rental income they made.
2017-2020: 3 years in Amli at Mueller - ($1,600 x 36 = $57,600)
13 year total = $110,900
So basically, Celeste spent around $110,900 on rent in 11 years (2 free in dorms). That is $10,081 a year, and about $850 a month (which is still less than the average rent in Austin since she shared the cost with a live-in boyfriend). Now you may be thinking “around $1k a month is not bad!” But then consider the bigger picture: she spent over $100k in money she will never see again.
So what would have happened if Celeste bought a home after graduating instead of renting numerous properties for 9 years? Let’s find out:
Celeste would have been able to increase her property’s value, and even have her old partners and roommates move in with her to help supplement the mortgage payments (aka house hacking). She would have been spending less money per month, AND that money would be going towards her own home - not someone else’s.
But now we HAVE to give a huge shout out to Celeste. She saw these numbers, and didn’t just sit on her butt - she did something about it! Celeste closed on her first home purchase in March 2021, and we are so unbelievably proud of her. You go Glenn Coco!
So let’s take a cue from Celeste, and help you buy your first home and stop wasting money on rent!
Final Thoughts
The first step towards saying goodbye to rent? Find out if you’re actually ready to buy! Through a carefully selected group of questions, we can help determine if the time for you is now or in the near future.
