Rent or Buy Your Home…Which is Better?

Rent or buy? Gosh, isn’t that the $64 Million Dollar question? And as many things go in real estate, the answer depends on your circumstances.

Keys to Success When Buying a Home

Smart Tips for Buying Your Home

Let’s start with the current state of rentals here in Phoenix.

In the ARMLS rental database the overall average lease rate for active listings is $1,820 per month and the average sq. ft. is 1,932. For apartments, the average rent is $1,568 with an average sq. ft. of 1,102 giving us an average rent of $1.42 per sq. ft. A year ago the rate was $1.22 per sq. ft., so the rise in asking price is 16.6% in just 12 months. The number of active apartment rental listings has declined 10% from 643 to 578 since last year.

In  nutshell, rents are rising and there are fewer homes to rent. And by the way, who wants to live in an apartment? Seriously. So let’s just focus on the houses.

If you are paying $1820 a month to rent a house, you might be thinking that you could be spending that money on a mortgage payment instead. For a low down payment, FHA-type loan, that gets you about $265,000 in house spending dollars. That gets you into a pretty nice house! But is it still better to buy or rent?

Reality time…

Check out this great rent-vs-buy calculator that the NY Times put together. It factors in all the costs of both buying and renting, and analyzes the pay-off for each. Given the scenario above, spending $1800 in rent vs $1800 in mortgage (plus taxes and insurance), if you are staying put for at least 2 years, buying will probably be the better choice, financially speaking. If  you are spending $1500 in rent, but could buy an equivalent house for $225,000, in two years, you will be ahead if you buy instead of renting.

Given the current climate in Phoenix right now, if you stay at least 2-3 years at the same address, you will most often  spend less if you buy a home rather than renting an equivalent home.

Of course, there’s the matter of the down payment…for an FHA loan, you must put down at least 3.5% of the purchase price for your down payment. Add to that closing costs, and you are looking at about $13,500 in cash. Yikes!

But start thinking you will never live long enough to make this dream a reality. It is possible to negotiate with the seller to add the closing costs to the purchase price, effectively financing those closing costs. AND you might be eligible for on of the down payment assistance programs that could cover the down payment. With $1000-2000 in your pocket, you could cover the remaining costs. Now that’s a pretty sweet deal!

Check out homes in the East Valley – Mesa, Tempe, Chandler and Gilbert – that might make great alternatives to renting…

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1850 E Winged Foot Drive, Chandler 85249, Sunbird 6A Lot 1-95 & TR A-N

  • $199,500
  • Bedrooms: 2, Baths: 1.75
  • Home size: 974
  • Lot size: 3,027
  • Year built: 1994
  • MLS #: 5857308
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144 N Warren Street, Mesa 85207, Lost Dutchman Villas

  • $189,990
  • Bedrooms: 2, Baths: 2
  • Home size: 917
  • Lot size: 3,023
  • Year built: 2004
  • MLS #: 5858099
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134 S Hassett Circle, Mesa 85208, Signal Butte Manor 2

  • $219,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,305
  • Lot size: 4,400
  • Year built: 2000
  • MLS #: 5827197
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10034 E Osage Avenue, Mesa 85212, Santa Rita Ranch Parcel 1

  • $247,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,444
  • Lot size: 7,196
  • Year built: 2000
  • MLS #: 5857799
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9143 E Boise Street, Mesa 85207, Apache Manor

  • $235,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,218
  • Lot size: 4,400
  • Year built: 2002
  • MLS #: 5856079
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1811 W Marlboro Drive, Chandler 85224, Knoell East Unit 5 Lot 837-1065 TR B C

  • $239,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,106
  • Lot size: 6,429
  • Year built: 1980
  • MLS #: 5857013
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825 N 95th Place, Mesa 85207, Superstition Village Lots 74-145

  • $249,900
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,296
  • Lot size: 8,307
  • Year built: 1975
  • MLS #: 5855401
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441 S Maple --, Mesa 85206, Windsor Shadows Lot 1-164 TR A-D

  • $234,900
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,407
  • Lot size: 3,601
  • Year built: 1991
  • MLS #: 5849560
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1020 E 9th Avenue, Mesa 85204, Poinsettia Villa 3

  • $232,500
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,551
  • Lot size: 7,253
  • Year built: 1961
  • MLS #: 5850423
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4217 E Carla Vista Drive, Gilbert 85295, The Willows

  • $249,900
  • Bedrooms: 3, Baths: 3
  • Home size: 1,464
  • Lot size: 3,024
  • Year built: 2007
  • MLS #: 5855583
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531 W Dana Avenue, Mesa 85210, Vineyard Place Amd

  • $244,990
  • Bedrooms: 4, Baths: 2
  • Home size: 1,572
  • Lot size: 7,240
  • Year built: 2017
  • MLS #: 5803085
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10341 E Calypso Avenue, Mesa 85208, Parkwood Ranch Parcel 14

  • $225,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,518
  • Lot size: 5,499
  • Year built: 2000
  • MLS #: 5824137
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8731 E Crescent Avenue, Mesa 85208, Wynstone

  • $215,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,087
  • Lot size: 6,042
  • Year built: 1996
  • MLS #: 5857572
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1500 S Kay Circle, Mesa 85204, Casa Mesa

  • $235,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,330
  • Lot size: 7,850
  • Year built: 1971
  • MLS #: 5845904
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4037 E Cabana Circle, Mesa 85206, Sunland Village 5 Lot 1111-1521 TR A-F

  • $234,900
  • Bedrooms: 2, Baths: 2
  • Home size: 1,482
  • Lot size: 6,761
  • Year built: 1979
  • MLS #: 5840249
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6730 E Preston Street, Mesa 85215, Villas at Red Mountain

  • $239,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,286
  • Lot size: 3,257
  • Year built: 1997
  • MLS #: 5854579
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2242 E Dragoon Avenue, Mesa 85204, Fuller Ranch Subdivision Lot 1-410 & TR A-H

  • $245,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,232
  • Lot size: 7,211
  • Year built: 1984
  • MLS #: 5857535
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8739 E Keats Avenue, Mesa 85209, Barrington Estates Amd

  • $249,900
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,808
  • Lot size: 3,375
  • Year built: 2000
  • MLS #: 5858044
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1247 S Boulder Street, Gilbert 85296, Western Skies Estates Unit 4 Amd

  • $249,000
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,661
  • Lot size: 3,193
  • Year built: 1998
  • MLS #: 5854901
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607 W Edgewood Avenue, Mesa 85210, Roosen Meadows 2

  • $239,900
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,549
  • Lot size: 6,181
  • Year built: 1974
  • MLS #: 5857940
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722 E Saragosa Court, Chandler 85225, Monterey Vista

  • $244,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,314
  • Lot size: 5,881
  • Year built: 1996
  • MLS #: 5858034
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1915 S 39th Street, Mesa 85206, Vista Villages

  • $237,500
  • Bedrooms: 3, Baths: 2
  • Home size: 1,292
  • Lot size: 3,805
  • Year built: 1987
  • MLS #: 5853834
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1743 Leisure World --, Mesa 85206, Leisure World Plat 14 Lot 1639-1803 & TR A-1

  • $249,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,752
  • Lot size: 7,658
  • Year built: 1979
  • MLS #: 5857231
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4219 E Contessa Street, Mesa 85205, Greenfield Park Lot 101-235 TR A

  • $210,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,186
  • Lot size: 4,488
  • Year built: 1987
  • MLS #: 5857615
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22 W Hillside Street, Mesa 85201, Center Terrace Lot 1-121 TR A

  • $236,000
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,554
  • Lot size: 6,704
  • Year built: 1980
  • MLS #: 5834833
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680 N Delaware Street, Chandler 85225, Lundquist Manor

  • $229,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,728
  • Lot size: 7,492
  • Year built: 1957
  • MLS #: 5857968
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8960 E Birchwood Circle, Mesa 85208, Broadway Manor

  • $237,000
  • Bedrooms: 4, Baths: 2
  • Home size: 1,512
  • Lot size: 9,261
  • Year built: 1998
  • MLS #: 5823300
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9346 E Plana Avenue, Mesa 85212, Mesquite Canyon

  • $242,500
  • Bedrooms: 3, Baths: 2
  • Home size: 1,401
  • Lot size: 5,830
  • Year built: 1999
  • MLS #: 5823284
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2003 W Western Drive, Chandler 85224, Knoell East Unit 4 Lot 513-836 TR A-D

  • $200,000
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,216
  • Lot size: 7,418
  • Year built: 1979
  • MLS #: 5857656
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6730 E Preston Street, Mesa 85215, Villas AT Red Mountain

  • $209,500
  • Bedrooms: 2, Baths: 2
  • Home size: 1,001
  • Lot size: 3,185
  • Year built: 1997
  • MLS #: 5814071
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1055 N Recker Road, Mesa 85205, Brookfield West

  • $189,500
  • Bedrooms: 3, Baths: 2
  • Home size: 1,160
  • Lot size: 1,986
  • Year built: 1987
  • MLS #: 5857612
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510 N 56th Place, Mesa 85205, Velda Rose Estates 3

  • $234,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,750
  • Lot size: 8,500
  • Year built: 1965
  • MLS #: 5838000
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1412 E Waterview Place, Chandler 85249, Springfield Block Four

  • $237,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,072
  • Lot size: 4,273
  • Year built: 1998
  • MLS #: 5857300
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5719 E Dodge Street, Mesa 85205, Dreamland Villa 9

  • $125,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,503
  • Lot size: 7,084
  • Year built: 1969
  • MLS #: 5855133
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501 Leisure World --, Mesa 85206, Leisure World Golden Hills Plat 6 Amd

  • $189,000
  • Bedrooms: 2, Baths: 1.75
  • Home size: 1,504
  • Lot size: 8,293
  • Year built: 1978
  • MLS #: 5857497
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2901 E Cathy Drive, Gilbert 85296, Rancho Corona

  • $245,000
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,340
  • Lot size: 7,166
  • Year built: 1999
  • MLS #: 5857850
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3790 E Gleneagle Place, Chandler 85249, Springfield Lakes Block 6

  • $249,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,158
  • Lot size: 5,113
  • Year built: 2005
  • MLS #: 5856746
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5919 E Dodge Street, Mesa 85205, Dreamland Villa 10

  • $224,900
  • Bedrooms: 2, Baths: 2
  • Home size: 1,423
  • Lot size: 7,458
  • Year built: 1969
  • MLS #: 5857646
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11327 E Covina Street, Mesa 85207, Dave Brown AT Mountain & University

  • $249,990
  • Bedrooms: 3, Baths: 2
  • Home size: 1,530
  • Lot size: 6,450
  • Year built: 1998
  • MLS #: 5856946
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412 N 105th Street, Mesa 85207, Crest View Park

  • $210,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,128
  • Lot size: 10,671
  • Year built: 1975
  • MLS #: 5857286
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901 N 96th Street, Mesa 85207, Superstition Village Lots 74-145

  • $224,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,056
  • Lot size: 8,298
  • Year built: 1972
  • MLS #: 5814264
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141 N Warren Street, Mesa 85207, Lost Dutchman Villas

  • $187,500
  • Bedrooms: 3, Baths: 2
  • Home size: 994
  • Lot size: 3,000
  • Year built: 2004
  • MLS #: 5854615
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1915 S 39th Street, Mesa 85206, Vista Villages Lot 1-130 Tract A-B C1-C2 D1-D2

  • $202,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,043
  • Lot size: 3,496
  • Year built: 1985
  • MLS #: 5822699
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6425 E Dallas Street, Mesa 85205, Dreamland Villa 16

  • $207,500
  • Bedrooms: 2, Baths: 1.75
  • Home size: 1,328
  • Lot size: 7,572
  • Year built: 1973
  • MLS #: 5841045
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2051 E Pueblo Avenue, Mesa 85204, Summer Place Phase 1 Lot 1-92 TR D

  • $250,000
  • Bedrooms: 3, Baths: 1.75
  • Home size: 1,472
  • Lot size: 7,245
  • Year built: 1980
  • MLS #: 5856780
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5205 E Dallas Street, Mesa 85205, Dreamland Villa 8

  • $175,000
  • Bedrooms: 2, Baths: 2.5
  • Home size: 1,238
  • Lot size: 8,784
  • Year built: 1968
  • MLS #: 5848067
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7411 E Drummer Avenue, Mesa 85208, Golden Vista Estates Lot 1-109 TR A

  • $239,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,410
  • Lot size: 7,501
  • Year built: 1986
  • MLS #: 5841286
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1454 W 6th Avenue, Mesa 85202, Alma Ests 4 Lots 241-274, 302-318

  • $204,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,128
  • Lot size: 6,238
  • Year built: 1959
  • MLS #: 5850199
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1743 E Jarvis Avenue, Mesa 85204, Mesa Linda Unit 2

  • $228,000
  • Bedrooms: 5, Baths: 2
  • Home size: 1,772
  • Lot size: 7,318
  • Year built: 1960
  • MLS #: 5840938
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545 Leisure World --, Mesa 85206, Leisure World Golden Hills Plat 6 Amd

  • $164,000
  • Bedrooms: 2, Baths: 2
  • Home size: 1,102
  • Lot size: 8,212
  • Year built: 1977
  • MLS #: 5853943
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ARMLS Listing Data last updated 12/17/2018 9:32 AM MST.

Kristin LaVanway
480-282-7464
kristin@hereinphoenix.com