It’s always a delicate question no matter the location. When is it better to rent or to buy? Renting of course has most of the short term advantages. There is the flexibility inherent with renting that ownership simply cannot match. The longer you intend to stay in an area, however, the more and more reasonable it becomes to buying your home or condo. So when it comes to the Twin City area, when does that tipping point come?
Believe it or not, Minneapolis/St. Paul is one of the best cities in the country right now for potential buyers. In fact, according to Forbes, only New York City ranks ahead of it as far as being a cheaper place to buy versus renting. Conversely, this also makes it one of the worst cities to rent in, especially at any term longer than one year.
The numbers speak for themselves. The metro area has an extremely tight vacancy rate, hovering at around 2.5%, which sets the rental rate on average at $965 per month. This figure has steady increased for the last several years, and is up 2.3% from the same time back in 2011. In fact, the National Association of Realtors projects a 4% average increase in rent nationwide this year, and further 4% increase next year as well.
Now take the costs of buying. The average home price is actually down over 30% since 2006, and the market is still struggling to turn that trend around. This makes it quite a bit cheap to buy right now, to the tune on average of $122 per month less. And as the market does slowly rebound, your return on investment grows with it. This highlights buying’s greatest advantage of all, of course; being able to sell if you ever have to move. Even a loss is better than what the typical renter can expect to receive; a diminished security deposit and nice reference letter, if they are lucky.
Long story short, anyone looking to settle in the Twin City areas for any length of time lasting more than a year would be very wise to seriously consider buying. There are several avenues available to the first timer, and while there are also many pitfalls, there are resources and guides easily found that can help to navigate these tricky waters.
Always remember that the traditional route is not the only one out there, and with a little research and old fashioned hard work, it’s possible to get a great deal that will make your relocation all the more satisfying.
Ed Michelson blogs for We Buy Ugly Houses Twin Cities. Visit their website for more real estate tips, or for help with selling a house in the Twin Cities.
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