Hey, all you First-Time home buyers and number crunchers. This is for you. I recently came across an interesting post on Trulia's Blog regarding affordability, Rent vs. Buy: Roommate Edition. Portland's housing market made into the article too. They examined the impact that renting with a roommate has in determining whether it is more expensive to rent or buy. The study explains:
“Since we started keeping track in 2012, it’s been a better deal to buy than rent in America’s largest housing markets – and for much of that time it hasn’t been close.”
It then goes on to ask the question:
“But does the equation change for renters who share their rent with a roommate?”
“While the standard rent vs. buy analysis reveals buying is cheaper than renting in all of the nation’s 100 largest metros, this doesn’t hold true for those choosing between renting with a roommate and buying a starter home.”
It seems obvious that sharing the cost of renting your living space by taking in a roommate dramatically decreases your housing expense (which is exactly what the report concluded), but it me thinking.
The savings you would gain by adding a roommate would also occur if you purchased a home. This presents an opportunity for a list of possible purchasers. And there are a number loan programs that enable you to use "roommate rent" to help you qualify for the mortgage you may need.
Here are two examples:
A smaller, move-down home is quite difficult to find in the current housing market. If the seller-turned-buyer takes on a tenant, they could buy a more expensive home knowing that the additional monies needed to pay the mortgage would be offset with the additional monies they receive in rent. Secondly, the older couple (ex. parents) could get a housing option that probably far surpasses anything else available to them in the current market.
Considering the concept of renting a portion of your house to be able to purchase and the perfect home is a personal preference. You will need to decide if it is right for you.