When Moving to a New Area, Should I Rent Before Buying a House?
- Adam Garrett
- Feb 17
- 4 min read
Updated: Jun 26
There's not a 1 size fits all answer in this case. For some, renting for a year can be better, for some, a short-term rental can be better, and for others, an immediate purchase can be best. If selling and buying around the same time, things can get tricky as well, though there are some solid options to increase your time in between that many are unaware of like seller rent backs and buyer early possession. Here are some of the factors to consider:
How long in total do you plan to be there?
This factor is in many cases the primary factor of whether you rent or buy. For the majority, the longer you live somewhere, the more lucrative of an impact it will have on your net worth.
The longer you'll be somewhere, the more it makes sense to rent 1st, whereas with someone like in the military where you'll only be there 3-5 years, it makes more sense to purchase instead of entering a 1-year lease agreement if you plan to purchase at all if you want to have the option to sell at the time when you leave at a lower risk of loss.
One exception would be investors, whether pro flippers or owner occupants who are willing to deal with the hassle and risks involved with a fixer-upper
If you have a growing family or household in the near future (whether via your biological children, adoption, foster care, renting out a room(s), or taking in your parents), renting has some advantages especially if your new occupants would be contributors to your household expenses like your mortgage
If you have a rapidly growing career, renting also has some advantages if the market isn't hot and if you would prefer to upgrade what you can afford without purchasing a fixer upper. However, a rapidly growing career can also negatively influence your options for programs to reduce your home cost.
How's the market, and what are the appreciation/depreciation projections?
The seasonal nature of real estate can mean that waiting a bit or buying earlier than you wanted to can save some significant $ or increase your available options. The market tends to cool and inventory tends to go down in the winter and things tend to heat up with demand outpacing supply in the late spring and summer.
The current real estate market in Hampton Roads isn't projected to rapidly increase like we saw a few years ago.
Are you certain that you will remain in the area?
If not, such as at a new job that is in a completely new career field, it can make more sense to rent first, especially if you wouldn't consider renting out your home after you leave the area.
How familiar are you with the area where you plan to move? One person I helped to buy a home with had previously come to the area for vacation, & decided to purchase here. We had talked about school districts, and they said that school district ratings weren't a high priority for them since their daughter & grandchildren planned to only live with them for a short time. Within months of them arriving, a shooting happened in a nearby school, the 1st of its kind in that school I believe, & possibly with kids at the home in that very school, that may have been one of the biggest factors influencing them to leave the area. In addition, she wasn't aware of the differences between her home state and Virginia regarding homestead provisions, which for her were a big deal.
If not buying in $, what is the mortgage/maintenance cost of a home vs the same home to rent?
Do you have any sort of connections to get a particularly good deal, 1 way or another?
Would you consider a room rental, especially if you don’t have any kids?
If buying with a mortgage, what are the interest rate projections?
At the time of this posting, mortgage interest rates are projected to very gradually lower over the course of the next few years.
Per Bankrate, “Refinancing your mortgage typically costs between 2 and 6 percent of the new loan amount. These closing costs might include fees for origination, a home appraisal and title services.”
Some lenders like Lower and some loan products have lower cost refis
Are you using a substantial program to reduce your home cost?
This factor is particularly important if using a program to reduce home cost that is available based on tenure of holding the mortgage and which can be reused ($15k w certain people)
In some cases, people just barely cross over the threshold of the income cap when they are finally ready to buy, when it's too late to use a valuable program to reduce home cost.
Programs don't last forever in many cases, so don't bank on a program available now being available in a year or 2. That said, in some cases, a superior program could become available for you that isn't currently available.
Are you considering renting out the home after purchasing?
If so, and you're certain about it, you may want to rent 1st so that when you make a decision on a purchase, you'll be better informed. It's ideal to have rentals that are in close proximity to where you live.
Even if short tenure is planned (though not too short, otherwise you can get into mortgage fraud territory), those who purchase as owner-occupants have lower down payment requirements, lower interest rates, & more homes available vs a closely comparable investor.
If things don't go according to plans, your mortgage, if a fixed rate, will typically go up at a slower pace than rent would.
Related:
Would you consider low-cost forms of rent or unconventional methods of living?
Are you financially prepared to buy?
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