There Is Wisdom in Renting Instead of Buying Real Estate in an Uncertain Market

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Should I Rent Instead of Buying Real Estate in an Uncertain Market?

There Is Wisdom in Renting Instead of Buying Real Estate in an Uncertain Market

Some experts would confidently tell you why you should rent in an uncertain real estate market. As usual, there is no simple, definitive answer. The only constant is that an uncertain market is often very temporary. The real estate market will make a rather quick decision to trend up or down. Therein lies the potential problem.

An uncertain real estate market is a transitory phase between an up or down market. While the Midwestern U.S. can sometimes have longer periods of stability in real estate prices, both coasts tend to have periods of rather rapid gain or loss of value. Therefore, looking for acceptable apartments for rent during transitory periods can make good financial sense. The prices for rental apartments and homes will tend to “lag” behind a dramatic increase or decrease in real estate values.

But, never discount the primary rule of supply and demand. Simply put, as the supply of “something” increases and the demand stays the same, the price of the “something” goes down. Should the demand increase with a constant supply, the “something” price will increase. An uncertain real estate market typically indicates a confusion of which part of the equation will change, thereby causing a change in pricing and value.

Without delving into more economic theory, the decision to rent apartments and homes in an uncertain real estate market may be if not the best at least the safest decision. Making large financial decisions, after which you cannot realistically afford to be wrong, should possibly be deferred until you can feel confident about the market. Finding acceptable home and apartment rentals for at least the shorter term may prove to be a wise financial and lifestyle decision during periods of uncertainty.

   

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