Should You Rent or Buy in the Bay Area?
If you’re choosing between renting and buying a home in the Bay Area, the decision will depend largely on your individual situation and your ability to take on the costs associated with each option.
Costs of Renting a Home
When you rent a house or apartment, you will be responsible for a number of initial costs. In addition to paying your first month’s rent, many landlords will also require that you pay an application fee and a security deposit—which can cost between one and two months of rent (Your security deposit should returned to you when it comes time for you to move out). If you own a pet, you may also have to provide a pet deposit as well as a non-refundable fee for each pet you own.
It’s also important to factor in moving expenses and the costs associated with leaving your current apartment (that is, if you are currently living in an apartment). Depending on whether your apartment sustained any damage during your stay, you may not get your deposits back or, in some cases, you might have to come out of pocket to pay for professional repairs and cleaning services.
Once you’re living in an apartment, some landlords require you to purchase rental insurance. Even if rental insurance is not mandatory, it is a great idea to invest in some kind of protection in order to safeguard your belongings.
Costs of Purchasing a Home
On the other hand, if you’re looking at Bay Area home listings, you should keep in mind that the buying a home can involve several costs beyond the actual price of the home. Many homebuyers come to the table with a large initial down payment, which can be anywhere from 3% of the home price and upwards. In addition to the down payment, homebuyers may also have to pay closing costs that can range from 2% to 4% of the total home price.
Once you’ve completed the initial process of buying a home in the Bay Area—unless you paid for the home with cash—you’ll have to make monthly mortgage payments, which will include the interest costs that you incur for borrowing the money to pay for your home. You will also be responsible for property taxes, homeowner’s insurance and any applicable homeowners association fees.
If you decide to sell your home, you may also incur several costly expenses. Many sellers carry out repairs and updates on their homes so they can attempt to get better offers on their property. Sellers are also responsible for providing the real estate agent with a commission and they may also cover legal fees, appraisal costs and home inspection services.
Benefits of Home Ownership
If you’re wavering between renting a home and combing through the Bay Area home listings, keep in mind that buying can offer several advantages over renting. Instead of paying a hefty sum to a landlord every month, homeowners can make payments toward their home’s equity.
Buying a home in the Bay Area also gives you the freedom to make modifications, landscaping changes, and updates to your property. Whether you choose to rent or buy, the Bay Area is filled with plenty of options for apartments, houses or condos to choose from.