Rent or Buy in Georgia? A Guide for Homebuyers
Deciding whether to rent or buy in Georgia can be a challenging decision for many in the state. This state has a whole market that is different than other places. For first time homebuyers in Georgia, the process can feel even more daunting. Where do you start? That’s why it’s valuable to explore some of the key considerations that can help you in making this tricky decision by hearing from the experts in the field.
Our property services of Atlanta and throughout Georgia evaluates the complex factors involved in both renting and buying real estate. It’s often not a simple thing. While there are general “rules of thumb” that can serve as helpful starting points, you really need to dive deeper into the specifics of a particular property or market to get a good answer. Here, we’ll outline some of the most important aspects to think about when deciding whether to rent or buy in Georgia. For first time homebuyers in Georgia, this insight could be a big deal.
Table of Contents
- Is It a Good Time to Rent or Buy in Georgia?
- What is the 5% Rule and How Can It Help You Decide?
- First Time Homebuyer Programs in Georgia
- Managing Your Rental Properties With BMG
Is It a Good Time to Rent or Buy in Georgia?
There are a lot of personal circumstances that come into play when deciding whether to buy or rent in Georgia. There are also a number of unique dynamics when it comes to the state’s real estate market. Buying in Gerogia isn’t the same as buying Kentucky. The same goes for renting. Purchasing property in Georgia offers benefits such as value appreciation, tax advantages, and predictable mortgage payments. If you’re first time homebuyers in Georgia, wading into these benefits sounds like a good idea. With Georgia’s relatively affordable housing market compared to many other states, buyers may find attractive opportunities in cities like Atlanta or growing suburban areas.
Renting in Georgia, on the other hand, provides flexibility, reduced responsibilities, and a simpler monthly budget. This is especially appealing in cities with a thriving rental market like Atlanta. However, renters may encounter challenges, such as increasing rental costs due to high demand and limited ability to personalize or control the property.
Considering Georgia’s real estate trends and economic growth, it’s essential to evaluate both the current and long-term market conditions when deciding to buy or rent. Tools like the 5% rule can guide you in making the best decision for your financial and personal objectives.
As of October 2024, the Georgia housing market has experienced a 2.3% increase in home prices compared to the previous year. Simultaneously, the number of homes sold rose by 2.3%, and the number of homes for sale increased by 4.2%. At the same time, the average home value in Georgia is up 2.4% over the past year, and homes are selling quickly. Given these factors, while there are more homes available, the competitive nature of the market and rising prices may make it a challenging time for first time homebuyers in Georgia.
What is the 5% Rule and How Can It Help You Decide?
If you’re first time homebuyers in Georgia, looking at common rules of thumb can help in this situation. The 5% rule, for example, provides a practical way to assess whether buying a home is the right financial decision for you. But it sounds mysterious, right? It isn’t so bad! It focuses on three key costs that apply to homeowners but not to renters: property taxes, maintenance expenses, and the cost of capital. If you’re a first time home buyer in Georgia, it can be a good place to start when thinking about the buying that house.
While originally designed by Ben Felix for the Canadian housing market, the 5% rule is equally relevant in the United States. Here’s how it works. Property taxes are typically about 1% of a home’s value each year. Similarly, maintenance costs usually account for another 1% annually. The largest expense, the cost of capital—combining the cost of borrowing and the opportunity cost of using equity—is estimated at 3% of the property’s value per year.
Now we get into a little math. Who doesn’t love math? Don’t worry though. It will be quick and painless. When these costs are combined, they represent roughly 5% of the home’s total value annually (1% + 1% + 3%). When you add these costs together, you get a total of 5%. To use the rule, multiply the home’s value by this 5% and divide that figure by 12 to calculate a monthly cost. This breakeven amount helps you compare the financial implications of owning versus renting.
If the monthly cost of owning is less than renting, it may make sense to move forward with buying that house. While it isn’t an all-encompassing algorithm to decide every time, it isn’t a bad starting point.
First Time Homebuyer Programs in Georgia
So, what if you are a first time homebuyer in Georgia? What then? Whether to rent or buy becomes a much trickier decision when you don’t have experience in both of the areas. Don’t fret. There are actually a number of programs out there that can help. Here are some first time homebuyer programs in Georgia that could be an option for many considering a house purchase.
Georgia Dream Homeownership Program
First there is the Georgia Dream Homeownership Program. It offers affordable mortgage financing options, down payment and closing cost assistance, and homebuyer education. That all sounds pretty good when you’re just starting out. Eligible first time homebuyers in Georgia can access low-interest loans and down payment assistance from this program.
Peach Plus Program
Then there is the Peach Plus Program, which is designed for qualified borrowers who may not meet the traditional Georgia Dream program criteria. It offers higher income limits and down payment assistance options, making homeownership more attainable for a broader range of applicants.
Atlanta Housing Homeownership Program
Finally, there is the Atlanta Housing Homeownership Program. What is that? It provides down payment assistance to first time homebuyers that are purchasing a home within Atlanta specifically. So if it’s not only Georgia but Atlanta specifically, it could be a possible option. If you are eligible you could receive up to $20,000, which can be used to supplement the down payment, cover closing costs, or buy discount points.
Investing? Manage Your Rental Properties With BMG
Determining whether it’s better to buy or rent in Georgia can be a difficult conundrum, especially when it comes to first time homebuyers in Georgia. Hopefully after reading this you are being pulled in a certain direction. As the band Roxette would say, “Listen to your heart.” But don’t forget to do some research and thinking on top of that. Looking at the current market and using the 5% rule can help you decide if it’s a good time. However, if you’re interested in purchasing rental property, that is a little different. That said, many of the same considerations apply. Use the rules for real estate and the current market to calculate the profitability of that type of investment.
If you’re looking for property management, look no further than Bay Property Management Group. We offer comprehensive property services in Atlanta, Boston, Baltimore, Philadelphia, Northern Virginia, and elsewhere. Contact BMG today to learn more about our services.
