An Analysis Of Housing Options Essays Example

Type of paper: Essay

Topic: Family, House, Real Estate, Money, Home, Homelessness, Housing, Parents

Pages: 5

Words: 1375

Published: 2020/11/12

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Housing is among the largest expenditures for many families. Individuals base the selection of a housing option on personal and external factors, which are uncontrollable. Most students who complete their college studies find it challenging to decide on whether to rent or buy a house.
In the given scenario as a student that is yet to graduate, I am faced with three housing options. These options include moving back with your parents, which is rent free, renting by yourself and remaining single, and buying a home with your fiancé (e). An analysis of the available housing options would assist in the decision-making option. The presented alternatives contain both advantages and disadvantages. It is imperative to regard that the preferred area of stay is Salt Lake County. This view is because my job would be on the campus of the University of Utah.
Life in Utah should not be difficult, taking into account the fact that its cost of living is below the national rate. Utah’s economy comprises of rapid job growth rates with minimal unemployment rates. It is ranked as the fifth affordable state in the United States with its cost of living is estimated to be 10%. Even so, the most important determinant of housing expenses is the income of an individual (Quigley& Raphael, 2004). Salt Lake County has a minimum wage rate of $7.25, which is similar to all persons (Livingwage, 2015). However, the poverty wage rate varies depending on the number of persons in every household. The living wage rate per hour per person is $9.43, and that of married couples is $14.18 (Livingwage, 2015). Consequently, it is proven that couples incur high expenses compare to singles. Based on this view the analysis of the housing option will incorporate the two scenarios.
I expect that I would have a job that occupies the community and social service occupation at the University of Utah after studying a social science degree course. Currently, the average wage rate for professionals in the community and social services occupations is $16.66 per hour. Assuming that, I work eight hours daily for five days a week. The total monthly wage rate would be ($16.66 x 8 x 20 = $2665.60) and the annual wages would be ($2665.60 X 12 = $31987.20). The given wages are not below the living wage within the state. Additionally, there is a possibility that I would get married to my fiancé in the coming year. He is working with the legal profession, which has an average wage rate of $31.65 per hour. For this reason, the monthly payments are ($31.65*20*8 = $ 5064), and its equivalent annually is $60768.
The table below is intended to compare the total income earned and the average expenses of single individuals, and a married couple living the Salt Lake County. It is essential to note that the given expenses include a provision of housing cost of $638 for singles and $693 for married individuals. The values are provided as estimates for individuals living in Utah.

Option one: moving back with my parents, which is rent-free

Ideally, the above table gives a clear view of the amount an individual and a married couple would save without paying housing expenses. The values given are applicable to the first option of staying with my parents, which would have no housing costs. This option appears more realistic because an individual is likely to save more of their earnings (Dempsey, 2013). However, most parents expect that when their children graduate and find their jobs, they should move out.

Advantages

1. An individual would save their income and avoid housing expenses. In this case, I would save $1925 monthly, which amounts to $23107.20 annually.
2. In addition, an individual would have fewer responsibilities and the expenses would reduce because parents are likely to cater for all household expenses as before.
3. Finally, there would be enough time to spend with family and friends

Disadvantages (Dempsey, 2013)

1. There would be less independence, which is expected to begin after graduation when an individual moves, back to his or her parent’s house.
2. When an individual stays with other people, including their parents, they are likely to lack privacy.
3. The thought of parents that the house belongs to them would require an individual to obey all their rules despite that they do not make sense.
It would be challenging to make a decision whether to select this option of moving back in with parents after graduation. Based on the amount of money saved it would be the best option to choose. Nevertheless, when people continue to mature the need for privacy is essential than the quantity of money saved. The drawbacks of this alternative outweigh the advantages, which would make it difficult to select it.

Option two: renting by myself and remaining single

It is estimated that the rent of a one-bedroom apartment in Utah is $375 to $500 per month while renting a two bedroomed house costs $625 to $800 monthly. Renting a two bedroomed house for a single person would be uneconomical. This idea is based on the notion that individuals are living alone; especially college graduates do not have many home items. It would also be cheap to rent out one bedroomed house. The idea, of renting a house, may cross the minds of several graduate students. Even so, most house rentals increase over time depending on the economic realtor values (The Wall Street Journal, 2015). Individuals prefer to rent houses when they expect that their jobs would require moving.
In the evaluation of this option, I have identified a two bedroomed apartments titled Eagles Landing, that is located 25 South Redwood Road, Salt Lake City UT 84104. This apartment is 759 square feet, and it requires monthly rent of $875 (Rent.com. 2015). The value lies within the 35% limit of the monthly income. The reasons behind the selection of this house include the space and it is closest to the place where my job would be situated. Even though, the rental payments are high compared with one bedroom apartment within the same region, space is essential. I expect to have savings of $1925 less $875, which is $1050 per month. In addition, the homeowner has provided several amenities, which are included in the rental payments. These facilities include kitchen (microwave, refrigerator, and garbage disposal), laundry, parking, and pets. Other features included are air conditioner, balcony, cable ready, ceiling fans, wireless internet access, and oversized closets. In addition, the apartment is located to several community amenities such as banks, business Centre, clubhouse, and fitness Centre among others. Below is the map of Utah city.

Below is the external view of the apartments

(Rent.com)

The internal setting takes the following shape

( Rent.com)

Advantages of renting (Property24, 2015)

1. There is more flexibility in renting than buying a house. In renting, an individual can stay in places they cannot afford to buy.
2. A tenant can quickly move out to a new home without finding other people to take over their leases.
3. The only amount of insurance paid by the rent owner covers the home contents. In contrast, the home owner has to incur costs of maintaining their homes
4. Tenants can save a large amount of money, which they could use to invest in other projects after they have paid the rental fee.

Disadvantages of renting (Property24, 2015)

1. The homeowner might fail to renew a housing lease.
2. In most cases, there should be consent with the homeowner before any adjustment can be made to a home.
3. A tenant cannot control the rising rental payments, which are affected by inflation.
4. In the renting of an apartment, the tenant does not create any wealth through investments because the house will never belong to him or her.
Option three: buying a home with my fiancée
Several advantages are associated with the purchase of a home. Buying a house could be expensive. Considering that the rates on mortgages in Utah are currently low and expected to increase, it would be advisable to take advantage of the current mortgage rates. Even so, the affordability is the main question that individuals ask before purchasing any mortgages.
Currently, the 30 year fixed mortgage rate is approximately 3.85% (Bankrate, 2015). This rate is gradually changing, and the trend shows that it is increasing. With a housing rental expense of $693 as couples, which is the average rent of a married couple, we can afford a house of up to $109,526 using the calculators. This value would require fixed monthly rental payments of $675. In this case, a down payment of $20,000 would be needed for the purchase of such a house (Zillow, 2015). Assuming that my parents are willing to pay the down payment this home would be affordable to purchase.

Advantages of buying a house (Property24, 2015)

1. There are long-term benefits pertaining to equity, security, and wealth in personal growth.
2. A homeowner can use the rising value of a home and make profits.
3. In owning a house, individuals do not have restrictions, which are imposed by property owners in rental houses.
4. The homeowner can purchase the house that they can rent out to generate more income.
5. In a mortgage, a homeowner who repays the amounts in the given time can improve his or her credit ratings
6. Tax deductions are possible in the long term, and an individual can save large sums of money.

Disadvantages (Property24, 2015)

1. The purchase of a house includes massive financial responsibility that may be stressful for the homeowner
2. Home ownership includes additional costs such as taxes, rates, and insurance.
3. There is the risk of losses or no profit when a homeowner wants to resale a house.

Conclusion

In conclusion, the three options present fundamental risks and benefits of renting and purchasing a home. To make the best decision, one ought to keenly analyze the pros vis-à-vis the cons of each option. One’s monthly income and savings also play a mega role in determining the type of house they will rent. The given analysis assists in the decision-making process of the available options based on the calculations of affordability of houses. Ideally, I would select the third option, which is to purchase a home with my fiancé. Of all the options available, this offers a lot for a person who is development-oriented. As much as staying with the parents may seem cheap, the pressure that they pose for one to move out is discouraging. Purchasing a home with my fiancée overrides all other options, It might be difficult to foretell the future, however, based on the amount of money that would be saved and the advantages of buying a house, it would be the most suitable option.

References

Bankrate. (2015). Current Mortgage Interest Rates. Retrieved from http://www.bankrate.com/finance/mortgages/current-interest-rates.aspx
Dempsey, J. (2013). Pros and cons of moving back in with your parents. Retrieved from http://carrington.edu/blog/student-tips/finance/pros-and-cons-of-moving-back-in-with-your-parents/
Livingwage. (2015) Living Wage Calculation for Salt Lake County, Utah. Retrieved from http://livingwage.mit.edu/counties/49035
Property24. (2015). Pros and cons of buying and renting. Retrieved from http://www.property24.com/property101/rent-vs-buy-guide/pros-and-cons-of-buying-and-renting/17510
Quigley, J. & Raphael, S. (2004). Is housing unaffordable? Why is it not more affordable? Journal of Economic Perspectives, 18(1), 129-152.
Rent.com. (2015). Eagles Landing. Retrieved from http://www.rent.com/utah/salt-lake-city-apartments/eagles-landing-4-466280
The Wall Street Journal. (2015). How Much You Should Spend on a Home. Retrieved from http://guides.wsj.com/personal-finance/buying-a-home/how-much-you-should-spend-on-a-home/
Zillow. (2015). Affordability Calculator. Retrieved from http://www.zillow.com/mortgage-calculator/house-affordability/

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