Housing Options

Your Lifestyle and Choice of Housing…

How does your lifestyle affect your choice of housing? Finances play an important role in housing

decisions. One major factor you will need to consider when

making housing decisions is your lifestyle.▪ Way you choose to spend your time and money

Your lifestyle will determine several housing decisions:▪ How close to work you want to live▪ How long you plan to stay in one place▪ How much privacy you would like to have

Opportunity Costs of Housing Choices

What are some opportunity costs to consider when purchasing a home? Buying a handyman’s special – home that is priced

lower because it needs repairs and improvements Renting an apartment may give you more mobility,

which is the ability to move easily from place to place but you give up tax advantages

Can’t only look at the benefits you have to consider what you will be giving up:▪ Time ▪ Effort ▪ Money

Renting vs. Buying

Why would you rent a home if you could buy one? Renting is a good choice for young adults

who are beginning their careers. It appeals to people who want or need

mobility. Renting is a good choice for people who do

not want to devote time or money to maintenance.

Renting can be cheaper, it appeals to people whose funds are limited.

Renting vs. Buying

Owning property also has advantages Buying a house gives the owner privacy

and some freedoms that may not be available to a renter.▪ No pet restrictions▪ Larger gatherings▪ No renovation restrictions

Costly but it has financial benefits Tax advantages Value may increase (good long-term

investment)

Evaluating Housing AlternativesHousing Advantages Disadvantages

Renting an Apartment

Renting a House

Owning a House

Owning a Condo

Evaluating Housing AlternativesHousing Advantages DisadvantagesRenting an Apartment Easy to move No tax advantage

Low maintenance responsibility Limitations on activities

Low financial commitment Less privacy

Renting a House See above Higher utility expenses

More space Limitations on activities

No tax advantage

Owning a House Pride in ownership Financial commitment

Plenty of space High living expenses

Tax benefits Limited mobility

Owning a Condo Pride in ownership Financial commitment

Fewer maintenance costs Less privacy

Tax benefits Need to get along with others

Access to recreation Limited space

Housing Information Sources

Where can you research housing options Libraries Newspapers Internet Friends and Family Real Estate Agents Government Agencies▪ HUD (US Department of Housing and Urban

Development)

Renting a ResidenceSelecting a Rental Unit

What should you know before signing a lease?

“3-bdrm apt., a/c, w/w carpet, pvt back ent, $800 + utilities, ref reqd”

Tenant – person who pays for the right to live in a residence owned by someone else

Landlord – person who owns the property that is rented.

Size and Cost

Two-story house High-rise building Apartment complex Contain separate living units

Studi0 (efficiency – one room) 1 to 3 bedrooms 1 + bathrooms (1/2 bath – sink and toilet)

On-site conveniences Swimming pool Tennis courts Laundry facilities Gym

Selecting an Apartment

Location Finances Building Layout and Facilities

•Near school or work•Near place of worship•Near shopping•Near public transportation•Near recreation

•Amount of monthly rent•Amount of Security deposit•Cost of utilities•Length of lease

•Condition of building and grounds•Parking •Recreation on premises•Security system•Conditions of hallways and elevators•Access to mailboxes

•Size and condition of units•Type and control of heating and cooling•Plumbing and water pressure•Condition of appliances•Condition of doors, locks, windows, closets and floors

Buying and Selling a Home As a homeowner you will gain financial

benefits: Deduct interest charges on your loan

payments from your federal income taxes each year.

Property taxes are also deductible Build equity as home value goes up

Drawbacks Limited mobility Financial risk if value goes down Must pay for all maintenance

Types of Housing

Single-family Dwellings stands on separate lot with a lawn and some outdoor living space

Multiunit Dwellings Duplex – single building divided into living spaces for 2 families Triplex – 3 families

Townhouse one of many single-family units attached to other units (own

outside entrance)▪ May have small back yard to use▪ Monthly fee to cover maintenance, repairs, insurance▪ Common spaces-lawn belong to association not individual owners

Condominiums one of a group of apartments that people own instead of rent.▪ Monthly fee to cover maintenance, repairs, insurance▪ Common spaces-hallways, lawn belong to association not individual

owners

Types of Housing:

Prefabricated Homes manufactured and partially assembled at

a factory.

Mobile Homes fully assembled in a factory

Hiring a Real Estate Agent

People who arrange the sale and purchase of homes as well as other buildings and land

Negotiate purchase price between buyer and seller

Real Estate services are usually free to the buyer

The agents may represent the sellers, who pay them a commission of 3 to 6 percent when the property is sold.

Economy

Economy- The ways in which people make,

distribute, and use their goods and services

Supply- The amount of goods and services

available Demand- The amount consumers are willing

and able to buy