Should You Buy or Rent a Home in Seattle?

It’s the age-old question . . . is it better to buy a home, or is it better to rent? Is it any different in Seattle, where the housing market is so hot right now?

We’re so glad you asked because we have a lot of opinions on this subject, and we’re happy to dispel some common myths about whether you should buy or rent a home. The decision about which option is better depends on many factors, but here are some things to think about as you go down the homebuying journey, whether that’s three months down the road or three years.

Build Equity for Future Home Purchases

One of the most important factors when you’re deciding whether to buy or rent a home in Seattle is equity. Both rent and mortgage payments keep a roof over your head, but what happens when you decide it’s time to move on? For renters, the answer is not much. You haven't built up any equity in the home—the landlord is the one who has been building equity with your rent payments.

When you buy, assuming you make some sort of down payment, you immediately have equity in your home. It’s the difference between what you owe on your mortgage and your home’s value. As you continue to pay down the mortgage, and home values increase, you gain equity in your home. With the way Seattle home prices have increased in the past few years, homeowners have gained A LOT of equity.

Then, if you outgrow your current home, decide to relocate, or want to downsize, the equity you’ve built can be used to help with your NEXT purchase. Think of your mortgage payment (at least the portion that goes toward principal) as forced savings toward your equity every month.

Lower Living Expenses Once Your Mortgage is Paid Off

When it comes time to make a decision about buying or renting, the big picture matters. In fact, deciding whether to buy or rent can have a big effect on your long-term financial picture, especially in retirement. Most people’s largest monthly expense is housing. If you always rent, it will stay that way. If you purchase a home, that monthly expense goes away when your mortgage is paid off, which frees up a good chunk of your budget.

We know it’s hard to think so far down the road, but long-term planning is vital to financial success. It’s especially important to think about retirement and how having a paid-off place to live could help you achieve your financial goals later in life.

No One Will Raise the Rent or Sell the Home While You're in It

What is the value of control and peace of mind when it comes to your home? When you own the home, you’re in the driver’s seat.

When you rent, the landlord dictates the price of living there. At the end of the lease term, your monthly payment may go up. Also, since the landlord owns the property, it could be sold at any time, potentially leave you scrambling for a new home.

On the other hand, if you’re the homeowner, you make the decisions. Your mortgage payment won’t change (if you have a fixed interest rate), so you can better plan your monthly budget. And YOU decide if you want to make a move that better suits your needs.

Your Home Can Be Whatever You Want You Want It to Be

How many of us have lived in a rental with all white walls, a stove that doesn’t work quite right, and bathroom that just has a terrible layout? If you want the freedom to adjust your home so it works best for you and your family, it can be really nice to be the one in charge. You can paint your walls blue, tear out that useless half bath, and add a deck if you want to.

You also have the freedom to have as many pets as you want with no additional monthly charge. There are some serious perks to homeownership, and controlling your home environment is one of the biggest. Anything is a possibility when you’re the owner.

Rent and Mortgage Payments May Not Differ Much

You know what happens when you make assumptions, right?

The first assumption that everyone makes when weighing whether they should rent or buy is that owning a home is the more expensive choice. Depending on your situation, rent and mortgage payments might NOT be so different, especially if you think you’ll be in the home for a while.

That’s especially true in our current market with such low interest rates. The median mortgage payment in Seattle steadily declined throughout 2020, even with rising home prices.

The breakeven point is the calculation of how many years it will take before the cost of buying equals the cost of renting. If you think you’ll stay in the home longer than your breakeven horizon, you should at least consider buying. If you think you’ll move sooner, renting might be the better choice since the way mortgages are amortized, you pay much more in interest during the first years of the loan. You also have to consider the closing costs when you factor in your breakeven point.

Of course, there are other expenses to owning a home (like maintenance expenses, taxes, HOA dues, and insurance) that you don’t have when renting, so it’s important to keep those in mind, as well.

We suggest an online breakeven calculator, or even better, talk to one of us (just go to our website to get started). We’re here to help with these complex calculations so you feel confident about deciding whether to buy or rent a home in Seattle. Even if you’re not ready to buy now, it’s never too early to start thinking about your future homeownership goals.