I recently got an email that perhaps reflects a situation faced by many people. Her home sale had fallen through, even after she had lined up all the movers and was ready to get going in a new community.
She was conflicted — should she sign a lease and just rent for awhile? Or should we put her stuff in her storage and look for a home real quick-like? There’s really no way easy way to answer, and much depends on your personal situation.
A: Move into an apartment while you wait to buy a house .
Let’s assume you commit to being there for a year. Although some people feel any money spent on rent is a waste, the real estate and mortgage market is in a great deal of flux and you’ll have a better idea of what’s a ‘good’ deal in a year or so.
You’ll also have a better idea of what kind of help the government is going to give you. As part of the stimulus bill, the government’s granted an $8000 tax credit for first-time homebuyers. However, if the housing market doesn’t get back on its feet pretty soon, I could see politicians rushing out another incentive to spark the housing market. In other words, waiting might pay off.
Will you miss out on price appreciation? I don’t know where you’re moving, but real estate prices don’t seem poised to take off any time soon, so I doubt you’ll miss much any appreciation. (Actually, I don’t think it matters where you’re moving — the market’s probably gonna be pretty moribund for at least another year.)
If you rent a year, you can get to know the area better, and really look at all your options. If you put your stuff in storage assuming you’ll buy pretty quickly, you might feel an itch to buy a place and get done with it — and make a poor decision.
The downside is that you’re moving twice. You’ll get settled in at your new place, and all of a sudden you’ll be looking to move. Even for people who move a lot, it’s a quick turnaround. You might spend a year living out of a box. For some people, that sounds like fun – for others, it’s torture.
B: Put your stuff in short-term storage while you hunt for a house.
The advantage to this option is primarily financial: you’ll save money on moving and rental costs. (You didn’t say where you’d be living while you look for a new home – I assume you’re crashing with friends or relatives or some other cheap, non-rent-paying option.)
The bigger question is whether you’re comfortable with living with just a few of your items while the bulk of your stuff is in storage?
Also, as I mentioned above, if you’re assuming you’re going to find a new home quickly, you might rush to buy a new home and make a bad decision. If you rent for a year, you have time to think things through.
The financial breakdown:
Option A: You pay rent for a year. You move twice (although your second move will be cheaper because it’s a local move, I assume the first one is long distance moving ).
Option B: You purchase storage for a short period of time, while you hunt for a home. Talk to the moving company who moves you about them putting stuff in storage for you – it’s easier and you might get a better deal on storage from them, rather than a self-storage facility (although you probably won’t be able to get your items EXACTLY when you need them – it will depend on the moving company’s timetable for when they have moving crews and such to pull your items from storage). Also check out PODs.
So option A is more expensive, but there’s a lot more to this question than just dollars and cents.
You also have other options if you only need space for a short amount of time. One of those is corporate housing, which is generally used by employees who are on work assignment away from home and need a place to stay. A Website that helps people hook up with this kind of housing is Corporate Housing by Owner .