Renting vs. owning in Baton Rouge

The Crescent at University Lake Condominiums. Photo by Collin Richie.

Searching for a new home inspires the inevitable debate: Rent or buy?

Much of the residential real estate market in greater Baton Rouge is stable, says Kelley Pace, director of the Real Estate Research Institute at Louisiana State University. There’s adequate rental stock and enough houses for sale that potential homeowners aren’t really priced out of homes. The rental market is also in high demand, says real estate broker Ty Gose of Latter & Blum. More than 2,000 units are scheduled to break ground in 2015, he says.

The average home sale price for Baton Rouge is about $216,000, according to Realtor.com. If a homeowner puts 10 percent down on a home at that price, they might end up with a monthly payment of $1,242. By comparison, a two-bedroom newly built rental unit may cost $1,100 per month, according to Gose.

Many see buying a home as an investment and renting as a waste of money. But it doesn’t always work out that way.

“Everybody’s been trained to think in terms of … ‘You need to quit renting; you need to buy a house because you can deduct the interest [from taxes],’” says CPA David Winkler, managing partner at Faulk & Winkler LLC. But the annual interest on a loan may turn out to be less than the IRS standard deduction. And other costs such as private mortgage insurance and property taxes may offset your equity. So it can take years for your property to appreciate in value.

“Most first-time homes are not the final home that people raise their families in,” Winkler says, adding that the less time you own a house, the greater the chance that you won’t see any appreciation from the property.