Tracking Value? Check Rent Rates

         "Rent vs Buy":  Still a Valid Measure of the Merits of Ownership 

A home purchase is the biggest investment most families make. Homeowners have enjoyed the jump in values seen across the country over the last year. Renters who missed out on the value bump may be figuring out how to acquire a share of future equity gains - or may be deciding that their monthly lease rate looks more attractive, when compared to a mortgage, repair bills, and the savings hit of a down payment. Unless rent rates go up at the same pace as appreciation gains, some renters will keep paying a landlord.

It will take some time to fully measure this trade-off. In markets with little available vacancies, new lease rates may well mirror market appreciation, but landlords may give a slower pace to rent increases for existing tenants. Tenants in rent-controlled markets may discover more benefit to staying put than taking on the uncertainty of future appreciation as a homeowner.

What about popular destinations for second/seasonal homes? This investment may have more focus on the intangible benefits of relaxation and recreation, but its cost is still measured. Thanks to sites like AirBnB and VRBO, rent vs buy analysis can be applied in these neighborhoods. Check the availability and pricing of short-term rentals (up to several months) in popular vacation spots and compare it to the cost of owning and caring for an occasional-use home. How much value gain is needed to balance the costs and benefits of ownership - or can short-term rental income augment the occasional use of a second home, making the owner both landlord and occupant?

Market dynamics may change - underlying principlesg still hold.

On a related topic, some seniors are evaluating the benefits of cashing in home equity gained in the recent market and downsizing. Here's a guide to help through that decision:   https://www.bankrate.com/mortgages/retirees-guide-to-downsizing/.

Thanks to Kiplinger for the house on cash photo