<p>My nephew (almosy 29 y.o., and single) is moving to San Antonio, TX to start a new job. He has been saving, and with a little help from family will have enough for a down-payment on a $150,000 or so property. It has been his goal for several years now to buy a house, but he has lived in much higher-priced cities until now. He has a very well-paying job.</p>
<p>But the possible wrench in the plan is that property taxes in Texas are high. He is thinking that taxes alone on a $150,000 house would be at least $6,000 - and for not much more than $6,000 he could pretty much completely cover the rent on a nice apartment.</p>
<p>So, are there any monetary arguments in favor of buying? He still wants to buy, but is thnking that renting is the wiser financial decision. Anything he might be overlooking?</p>
<p>$6000 is $500/mo. Even in San Antonio, it’s hard to believe that a “nice” apartment is going to be $500/mo. It might be a decent place, but it probably won’t be comparable to the house, especially space-wise. Moreover, landlords are also affected by high property tax, and this is passed on to the renter, so I suspect that he is underestimating the rents.</p>
<p>The calculation will come out a lot more even, I suspect, if he compares apples to apples, e.g, a house versus a comparably-sized rental house, and a condo versus an apartment.</p>
<p>Aren’t there some tax benefits to having a mortgage? Of course, with ownership, he’d be stuck with repair and maintenance costs as well as insurance and who knows if he could resell at a good price if he needed to? Maybe he could rent for a year and look around for the perfect house. I admit I don’t know much about this, but it’s an interesting question. There is the equity issue. In VT now there are laws that protect a new buyer for problems within the first year. I wonder if that’s true in Texas.</p>
<p>I think you are correct about this. But that still leaves the question whether it makes economic sense to buy the “orange” when the “apple” would be sufficient. It would of course be different if he had a family and needed more than a one-bedroom apartment, but he doesn’t. Buying on one hand seems like a better economic deal than renting (if you own something it is yours, but if you pay rent you are left with nothing at the end) but I think he was thinking that the difference for him between owning and renting would not be so large. Now I think he sees buying as a complete luxury.</p>
<p>I don’t think it is a good idea. A lot of young people move areound a lot as job opportunities arise, and owning a place can be like harness around you, especially since the housing buying market is slow. Even those who are pretty sure they want to stay in an area might want to wait a bit. My friend’s son bought a house as newly wed, and now that he’s been there a couple of years and wants to start a family, he and his wife decided to sell and buy or rent elsewhere, as it is not an optimal area to them with their new goals. You just can’t foresee these things unless you know the area very well, like having grown up there. The nuances take time to learn. And when your life is going change drastically because of your age and opportunities and natural transitions, it’s easy to change your mind as to where you want to live. </p>
<p>Even as I am writing, I know several young people stuck with places they bought because they were good deals in the last several years and as their jobs, partners, lifestyles have changed, they are now wanting to selll. My husband’s cousin is particularly stuck in something he really does not like and cannot unload. Another friend’s son just go married and his wife wants something different, plus the locale is not what she like and is terribly inconvenient to where she lives. Still another is engaged to a woman who owns a house, so he is looking to rent or sell his condo , as she has two little kids. You get the gist of how things can change very quickly at that young age.</p>
<p>I don’t think its ever a good idea to buy someplace as soon as you move, especially if you are not experienced in real estate and plan it for your primary residence.</p>
<p>My S had a job in a small city in northeast Texas. He paid $650/month for a crappy one bedroom apartment. It was not nice and was in an apartment complex, it was typical for his town. A nice newer apartment was close to $900/month. </p>
<p>Apartments are more expensive than I remember and I expect they would be even more in a larger town. S’s girlfriend pays over $900 for a 2 bedroom (not in Texas but in a small town in the Midwest). My D pays $1100 for a one bedroom in a medium size city out east.</p>
<p>Just trying to say that renting may be more expensive than you think and no where near the room you would have in a house.</p>
<p>An issue in Texas real estate is appreciation. You can get a fair amount of house for the money in Texas but you need to be careful because new houses are always being built, the edges keep moving away and there is a premium on new (which tends to exceed newly renovated outside of well established valuable areas). So I would think of the home buying process there as one of meeting need and want. As long as he has reduced expectations about growth in value and buys carefully, he should be ok. </p>
<p>I’m not up on current rents in SA. It used to be that rents were so low even cheap houses were more expensive. You could live in a nice complex with good landscaping, a pool and other amenities for less.</p>
<p>I don’t know about San Antonio, but my son found a nice large apt in a great neighborhood in Kansas City for $525 per month, so it can be done in some places. At his age (24), having the landlord responsible for repairs, maintenance etc. is much preferable. In his case, he doesn’t have the money for a downpayment, but even if he had, I think renting would be better at first.</p>
<p>I just don’t know how you buy when you’re a young single unless you’re a-okay with selling again in a few years, whichcase those financial (and logistical) ramifications need to be considered, too. If that’s acceptable, it can be a good thing. Our mortgage is significantly less than our rent was, and even though our home is bigger than our apartment our utility bills are coming out to be about the same or less than what they were. The insurance actually isn’t bad either, but in our case we moved from a high crime area to a low crime area so the difference switching from renters to homeowners isn’t as bad as you might think. It would not have been worth it for us if we thought there was a chance we might need/want to move any time soon, however.</p>
<p>BF had planned to buy as soon as he moved out here and if he had we wouldn’t be getting married. What he would have bought a year ago would have been completely inappropriate for what we need now, which he had no way of predicting at the time.</p>
<p>What Emaheevu is saying is what I feel is the issue with young single in a new area buying. So many changes will be coming up in the near future. And it isn’t as easy to sell as it used to be.</p>