Leasing vs. Buying a Home in Brownsburg, Indiana

OK, I just can’t help myself. I am obsessed with statistics, as you well know if you’ve ready any of my blog posts here. This is a comparison I’ve been wanting to do for a while. I’ve known that for many years, leasing a home (not apartment) in Brownsburg on its face costs more than buying. I wanted to see if I could determine just how much.

Yes, there are many factors to consider when comparing these two things. I also routinely point to one of my favorite saying when it comes to statistics:

“If you torture the data long enough, it will confess to anything.” -Ronald Coase

Having said that, I would like to present a couple of graphs I created based on our local market. It probably over-simplifies things, but you should get the general idea of my point here.

These two graphs take all single-family and condo rentals and sales into account over a ten-year period.

This first graph shows how leases since 2012 have really spike upward as a factor of all real estate transactions involving homes and condos in Brownsburg. For some reason though, in 2016 that percentage dropped rather dramatically. I think this may be most likely due to the overall tightening of the market; a smaller supply of homes to rent or buy. It could also be that the rental market in Brownsburg is becoming saturated. This definitely bears watching,

Now here’s the fun graph. I try not to torture data, but on this one I had to make some assumptions. In the early to mid 2000’s, there was a plethora of adjustable rate mortgages being handed out to anyone with a pulse. I could not locate data specific enough to determine the prevailing down payment and rates for every type of loan in every year, so I went with a basic 10% down payment and the average conventional mortgage rate in July of each year. This was for simplicity’s sake.

Since most mortgages then and now include taxes and insurance costs when you have a lower down payment, these are a part of that number (PITI, or principle, interest, taxes and insurance).

This graph shows that pretty much since the housing bubble , monthly rent payments have out-paced monthly loan payments.

According to this graph, in 2016 you are likely to spend almost 20% MORE each month to rent a house than making mortgage payments on that same house. The disparity between rental rates and mortgage payments is growing in Brownsburg. However, a lot of people don’t realize that lenders are once again making it easier for people to qualify and purchase homes.

Are you renting now or considering it? It might be worth your while to take another look at purchasing. Own your home. Build equity in real estate. Want to talk about it? Contact me and see if now’s a good time to weigh your options. 

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