Three Reasons to Rent Before Buying in a New City
It’s a standard scenario. I’m at an open house, meeting potential buyers and homeowners. In walks a couple just off an airplane from across the country. They’ve taken a great new job and plan to transfer to the area. They owned a home in their old town but sold it, and now they’re checking out the real estate market in their new city to see what’s available.
Or, I get a phone call from someone who was referred to me. The potential client is moving to town and wants to meet with me about getting into the real estate market. But usually, I’ll tell the person up front: “You should really consider renting for a year before you buy.
Conventional wisdom says that as a Realtor®, I should be excited about working with a new buyer. But I believe it makes much more sense to rent for the first year you’re in a new city. Here are three reasons why.
1. It takes time to learn the city and its neighborhoods
Often, someone will move to a new place and think they’ll spend their time in one part of town, only to find they actually like it better somewhere else. In this case, they haven’t acted as an informed buyer.
Being an informed buyer means knowing the market or inventory of houses and the intricacies of different neighborhoods. For instance, in San Francisco, you need to be aware of the weather patterns affecting various parts of town. Some neighborhoods get lots of sunshine; others are often shrouded in fog and blasted by wind.
Buying real estate is not only a huge investment; it’s a commitment to the home and the area. You can’t be an informed buyer unless you’ve spent some time exploring the neighborhoods. Take a year to learn the different parts of town and the characteristics of the various neighborhoods. Each week, explore a new restaurant in a different part of town. Go for a walk or do your grocery shopping in another. Also, take time to learn about city politics and government, to check out the local board of education and school districts (if you have kids), and to explore the parks and playgrounds. Once the year is up, you’ll be in a much better position to make a huge investment.
2. A lot can happen in a year
Imagine buying a home not long after you hit town, only to discover in six months that you hate your new job and your former employer wants you back. Or, you’ve received an offer for an even better job in the metro area, but it requires commuting by freeway, and you’ve bought a home in a part of town that’s as far from the freeway as you can get. And there you are, stuck with a new mortgage and a home that won’t be easy to unload.
So much can happen when you uproot your life dramatically, and it’s difficult to accurately predict how things will eventually “settle.” Give yourself the time to get grounded in your new life by renting a home or apartment instead of buying, so that you’ve got the flexibility to make adjustments you hadn’t anticipated.
3. Moving to a new city causes enough stress; why add to it?
Moving is never easy. So much happens at once, especially when you’re relocating to a new town. You have to say goodbye to your friends and family, pack up the house, close out your work, and hire movers — and then do most of the same on the other side, including finding a new place to live.
Too much change at once is hard to deal with, and focusing your energies on finding a home to buy leads to additional stress and anxiety. It might just push you over the edge. On the other hand, renting an apartment can give you flexibility and simplicity. The stakes are so much lower, because you know that wherever you chose to live is only temporary. And after your lease is up, you can likely rent month-to-month.
One caveat: a corporate relocation package
The above points may not apply if a company is paying to move you.
Many times, if you’re working for a large company and get transferred, or you get a job offer from a new company, there will be some type of relocation package. Depending on the company and your seniority, this can be anything from assistance with packing and moving to paying all of your real estate commissions, fees and expenses. The company wants to make it easy and affordable for you to take the new job.
A friend once had his real estate commission on the house he sold paid for by his company. His employer also picked up all fees associated with his purchase and paid extra points to buy down the interest rate on his new mortgage. In this case, there was little reason not to buy, as the company took away all of the financial risk.
Often, a company will give you a certain amount of time to make a home purchase, usually six months to a year. If that’s the case, take my advice and make the most informed decision possible. It will make the company’s incentive that much better, and you’ll have a better chance of finding the home you’ll want to live in it for years to come.
Brendon DeSimone is a Realtor® and real estate expert based in San Francisco and New York. He is a contributor to Zillow Blog, has collaborated on multiple real estate books and is often quoted by major media outlets. Follow Brendon on Twitter.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.