Rent or Buy? It really is up to you.

The New York Times has fomented a lively discussion in the comments section of last Thursday’s article on whether renting or buying a home makes better sense these days.

The answer -- as it's always been -- is that it depends on many variables, but most particularly it depends on the home and on you.

Still, the Times makes some important points about how one analyzes the financial aspects of what is not always a straightforward decision.  And it offers up a really cool online tool for figuring the various financial ingredients that go into the decision-making cauldron; ingredients such as the price of the house and interest rate, of course; but also less prominent ones like how long you intend to occupy the place, the rate of inflation and the opportunity costs of not putting one's assets into alternative forms of investment.

The calculator weighs 21 distinct factors clustered into eight broad categories: home price, length of stay, mortgage terms, projected future price increases, taxes, closing costs, maintenance and fees, and additional rental costs like the security deposit and broker’s fee.

In major metropolitan areas, notably New York, Boston, Washington, San Francisco and Los Angeles, house prices gone up to the point that some fear a bubble is forming, and renting – never a bargain in any of those cities – is looking more and more like the better deal.

Central Pennsylvania and Lancaster particularly are much less volatile markets, subject to less rapid appreciation and much less turbulence after a cycle has peaked. 

We’re reminded in the end that the most important variable in making the ownership versus rental decision is captured in the old saw about location. And it bears noting that there are locations within locations, such as the neighborhood-to-neighborhood differences in market dynamics between, say, downtown Lancaster, Grandview Heights, Chestnut Hill and Hamilton Park.

So go have some fun with the New York Times’ nifty calculator tool, but also be mindful of what one of the online commentators – Dora of Brooklyn – observed:

“People don't seem to see a house or apartment as a home anymore, a place that grows roots, neighbors, that over-used word, community.  This is a part of life that shouldn’t always be monetized if you don't have to.”

When all is said and done, the best informed decisions are often the ones that take full account of what your heart tells you as well as your pocketbook.

Get On Your Bike And Ride -- And Don't Stop There

Friday is National Bike-to-Work Day and Lancaster is all-in with the Spoke'n Gear Bicycle Expo at the Southern Market Center on South Queen Street.

We love the daily cycling commute -- it's a great way to get your head into a productive day and even better to leave the office behind in the evening.  And of course Lancaster is one of the most enjoyable settings in the country for cyclists at all levels.

But riders always need to be mindful and alert to the inescapable conflict for pavement between motorists and themselves.  A small number of drivers are downright hostile -- boors and morons they are -- but most are simply unaware of the hazards their vehicles present.  Share-the-road signage and other educational steps help, but the reality of competition for limited road space between two objects of different sizes and weights and moving at different speeds is a structural inevitability of the road and street network.

More bicycle infrastructure -- dedicated lanes, paths and trails -- will be welcome, but these can be expensive and sometimes controversial.  Another measure we support is traffic calming, to slow those cars down, particularly in urban centers.

Traffic calming also costs money, but a few years ago Lancaster city leaders tried a novel, low-cost approach -- narrowing traffic lanes on East King Street with painted lane lines.  We wondered what became of that promising experiment.

Now, Bill DeBlasio's new administration in New York City is making traffic safety its highest transportation priority and is looking closely at what Stockholm (no surprise in that) has done to make motorists smarter, safer drivers.

Our friends at It's Modern Art on W. Chestnut St. have the right idea.

More people getting on their bikes, we believe, will help the roads become safer -- but it is only one piece of a complex set of strategies.  We're certain of this: safer, calmer, bike friendlier streets and roads make communities more pleasant, more attractive and more productive.  That, and always wear your helmet.

Getting Over The Loan Qualification High Hurdles

The market for buying and selling a home has lately been a tale of countervailing forces.  Inventory has been low for an extended period and that puts upward pressure on prices.  Borrowing rates remain low, as well, meaning buyers can afford more and can bid higher.

But borrowing is tougher than it's been in decades, as banks -- chastened by the excesses of the 2008 financial meltdown -- have maintained tight-fisted lending standards to the point they are a major drag on the housing recovery.

The Wall Street Journal's MarketWatch website reported just the other day that "the housing sector has become one of the few troublesome spots in the economy this year, with some analysts pointing to tight credit as a major factor."

The chart below displays the number of lending institutions reporting to the Federal Reserve whether their lending standards are easing or tightening.  All categories of borrowing have been getting tighter in 2014, even prime loans, though less sharply than other types.

source: www.marketwatch.com

Mortgage credit has "taken a step back," the story quotes one leading analyst from TD Bank, and these tighter lending standards will slow the market further.

For those buyers who qualify for credit, the trend means fewer competitors to bid up prices -- even considering the reduced stock of inventory.  But qualifying is more frustrating than it's been in a very long time, and as a result, some buyers are turning toward alternative credit products that are easier to obtain.

Bankrate.com has found that more affordable but higher risk adjustable-rate mortgages are staging a comeback and, as homeowners have seen equity recover, home-equity credit lines are also coming back into play.

We’ve even seen some creative homeowners use their existing equity to leverage the next purchase.  We had a recent client looking to buy here in Lancaster without selling their out-of-state property, which has built up significant equity.  By taking a line of home-equity credit on that place, they were able to finance their purchase here, both cheaper and without the hoop-jumping of qualifying that now attends to a traditional mortgage loan.

It takes a determined buyer with a strong stomach for the additional risk, but financing alternatives like that represent at least one available strategy to help overcome the extreme caution with which lending institutions have kept all but the most highly qualified borrowers out of the market.

Welcome to the Lancaster Notebook

Welcome to our new blog on our newly redesigned website.

We're calling our blog Lancaster Notebook because we want it to be a reflection of our own love and continuous rediscovery of Pennsylvania's most dynamic, attractive and fascinating small city, Lancaster.

We will be posting to our blog regularly to share with you the goings-on and things-to-do all around the Red Rose City and environs, as well as keep you informed of important information you can use if you're thinking about buying or selling a home or property here.

While you're here, please go to our website, then follow us on Twitter, and give us a "like" on Facebook.

We welcome your feedback and suggestions and we're looking forward to making this blog an active and fun community, all revolving around our favorite place of all.