In this article:

Your home is on the market, and you can probably count on moving soon. But if you are not already under contract to buy your next property, what’s next? Should you buy or rent after selling your home?

  • How much will you receive from the sale of your current house? And what’s the best way to use the money?
  • Are you moving to a new area? Renting may make sense until you get the lay of the land
  • The time you expect to stay in your next residence matters

Of course, check current mortgage rates unless you can pay cash. They significantly influence the cost of homeownership.

Show Me Today’s Rates (Oct 14th, 2018)

Questions, questions

Spoiler alert! When you click on a headline posed as a question on a news story, the answer is No. “Is Angela Merkel a secret Muslim?” No. “Are aliens running MIT?” No. Just occasionally, the answer is, “Your guess is as good as ours” (as in, “Will this winter be the worst on record?”) but it’s nearly always No.

It’s different when the headline-as-question is atop an article on personal finance issues. The answer then is almost invariably “It depends.” But typically, that’s okay, because the article can explain what the answer depends on, and guide you through the process of making an informed decision.

That’s the aim here. Should you buy or rent after selling your home? It depends. But read on to answer the question intelligently for yourself.

How long you’ll live in your next home

In April 2018, USA Today quoted a study of home sellers’ costs. It reckoned the average across America at that time was $18,342. But that average covered broad variations. In some markets, you could pay less than half that. In the hottest one (San Jose, CA), it was just north of $73,500.

And that’s just the cost of selling. If you’re also buying, you can typically add many thousands (2-5 percent of the purchase price) in closing costs to your selling tab.

How costs affect whether you buy or rent after selling

If you’re planning to live in the home you buy for a decade or more, these costs remain painful. But you’re spreading them over a long period, which eases that pain. All you can do is shrug and see them as the price of being a homeowner. Over that time, there will likely be plenty of compensations to make you forget them.

But suppose your employer sends you on a two-year posting to San Jose. And, after that, you’re almost sure you’ll get moved somewhere else. Suddenly, those costs are in danger of creeping into six figures. Spread over just 24 months, that’s a huge expense.

But might it be worth it? Might home price inflation be so rapid as…