Boise Area Renters

Read to see how you save money be buying a home instead of renting.

This report is written for the benefit of Boise area renters who are considering whether to purchase their own home or continue to rent. Monthly payments for Boise rental homes--and rental homes in general--are usually priced at about 80% of a typical mortgage for the same home. This pricing strategy makes it very tempting for renters to simply continue to rent year after year. After all, if one can live in a comparable house for $3,000 to $4,000 less per year, why not continue to rent? The truth, however, is simple. Renting is almost always more expensive than buying your own home. In Boise, where the housing market is strong, and homes are appreciating at consistent rates, this is particularly true.

An astute observer would be led to ask, “Why would a landlord be willing to rent a Boise home for $400 to $500 below what he is paying on his mortgage?” The answer is simple. That landlord is getting benefits beyond just the monthly rental income--benefits that could be yours if you were to buy your own home rather than continue renting someone else’s home.

Those benefits are very simple--taxes and appreciation. Let’s take a typical tradeoff. Let’s say you have a choice between renting a home in Meridian for $900. At the time of this writing, This would rent a very relatively new 1500 square foot home in a nice neighborhood. The same Meridian home would sell for $200,000 and require a $1500 per month mortgage. How could a $1500 per month mortgage possibly be less expensive than a $900 per month rent payment? Again, these are real numbers for starter homes in Boise, Meridian, Kuna, Nampa, or Caldwell as of April 2007.

	Rent a Home	Purchase the same home
Monthly Payment	$900	$1,500
Annual Payment	($900*12)= $10,800	($1500*12)=$18,000
On the surface, owning your own home costs almost $8,000 more per year than renting. However, don’t forget the following factors:
Annual amount saved in taxes	$0 (rent payments are not tax deductible)	$3,600 (mortgage interest is tax deductible)
Annual Real Estate Appreciation	$0 (as the home becomes more valuable, all that value goes to the Landlord)	$10,000 (at 5% annual appreciation, a $200,000 home will appreciate $10,000 in one year)
Annual Net Savings	$0	$13,600
Net Cost	$10,800	$4,400

Summary: By renting a typical rental home in the Boise area, you will pay around $10,800 per year. By electing to purchase the same home in the Boise area, you will spend about $4400 per year. (This assumes prices appreciate about 5% per year, a rate substantially below the 20% annual appreciation Boise has experienced over the past three years.)

Conclusion: It rarely makes financial sense to rent a home when there is any possibility of purchasing a home instead. So why does anyone rent? Research shows that Boise residents rent because they believe they have no choice. Typically, renters claim they are not qualified to buy because they have poor credit or can’t afford a down payment. As you will see from other information on this site, The HELP Program helps Boise area renters overcome these obstacles and qualifies for their own mortgage. Don’t miss out! Don’t rent if you don’t have to. Call us at 208-938-4032 to find out about HELP’s unique rent to own program that can get you into your own Treasure Valley home.