Welcome to one of the top 40 hot real estate markets in America. For renters this means slowly increasing rent, for buyers this means slow accumulation of wealth. And for military families that have the VA Home Loan Program and an “Uncle Sam” paying for their housing (BAH), the Tacoma/Olympia region is the perfect storm.
Military families have an advantage over civilians as they can cover rents with their BAH or decide to keep a third to half of that housing allowance as accumulating wealth. And even if you are staying at JBLM for only 2 – 4 years, you can put a home into property management when you PCS, wait for the best time to sell, and sometimes own a second home at your new assignment!
Not all markets however, are low-risk for a home purchase. Below we will go over the pros and cons of renting vs. buying, and how to pick the right market to generate family wealth. Eventually you will want to own a home, as it is the safest way to build your family’s nest egg over time. Red Dot owner James Marszalek rented during his military service and lost out on $136,000 because he didn’t understand the VA Home Loan program or using low-risk homeownership to build wealth.
Buying a House Near JBLM
Pros:
- Equity Building: Homeownership allows you to build equity over time, which can be a valuable asset for your financial future. This equity can be leveraged for future investments or used as a safety net in times of need. Homes in the U.S. have experienced an average annual appreciation rate of approximately 4.25% from 1967 to 2024. If we apply this average rate to a $450,000 home over four years, we can estimate that the equity increase due to appreciation would be around $79,875. Sources: In2013Dollars.com; Advisor Channel
- Stability: Owning a home provides a sense of stability and security, which can be especially important for families looking for a long-term base. This stability can enhance the well-being of family members, providing a consistent environment for children and a sense of permanence.
- Tax Benefits: Homeowners can take advantage of various tax deductions, including mortgage interest and property taxes, which can lead to significant savings. For example, if a homeowner pays $10,000 annually in interest on his mortgage and falls into a 25% tax bracket, the potential tax savings could be about $2,500 per year. And there are also meaningful tax relief due to property tax deductions. These savings can offset some of the costs of homeownership and contribute to overall financial well-being. Sources: Calculators.org; NerdWallet
- Leveraging a hot supply vs. demand market: The housing market dynamics near JBLM are a critical factor to consider. With over 45,000 service members stationed at the base and only 5,200 homes available on base, the demand for off-base housing is high. This scenario, coupled with the larger trend of a national housing shortage and specific local market conditions, suggests that housing prices in the area are likely to continue on an upward trajectory. The basic economic principle of supply and demand is the core driver of this (and any) market growth, making it an opportune time for military families to consider entering the housing market as buyers.
- Military Orders won’t force you to sell: If you need to move due to military orders, selling your home alone can be a complex and uncertain process, especially in a fluctuating real estate market. The ability to sell quickly and without financial loss is not guaranteed, unless you plan in advance to convert the residence into a rental under local property management. That way you can wait for a favorable market, cover your mortgage, and still qualify for another mortgage/home at your new duty station. A quality real estate agent familiar with the mobile military lifestyle can show you the numbers even before you buy.
Cons:
- Financial Commitment: Buying a house is a substantial financial investment, and it’s crucial to ensure you’re financially prepared for the associated costs. This commitment requires careful budgeting and planning to avoid financial strain.
- Maintenance Responsibilities: Homeowners are responsible for all maintenance and repairs, which can be time-consuming and costly. This aspect of homeownership can be daunting for those unaccustomed to the responsibilities of property upkeep.
Renting Near JBLM
Pros:
- Flexibility and Mobility: Renting a house near JBLM allows military families and individuals to maintain flexibility in their living arrangements. This is particularly important for those who may receive new orders or need to relocate on short notice. Renting can provide a hassle-free option to move quickly without the concerns of selling or renting out a property.
- Lower Upfront Costs: Renting typically requires less upfront investment compared to buying a home. Renters usually need to pay a security deposit and the first month’s rent, whereas homebuyers must often cover inspection & Appraisal costs, closing costs, and other expenses that can easily total over $10,000. This can be advantageous for those who are saving up for a future home purchase or prefer to allocate their funds elsewhere.
Cons:
- Lack of Equity Building: When you rent, your monthly payments go towards the landlord’s mortgage, not your own. As a result, you miss out on the opportunity to build equity in a property. Over time, homeowners can build wealth through property appreciation and equity, whereas renters do not benefit from these long-term financial gains.
- Restrictions and Lack of Control: Renting often comes with restrictions set by the landlord or property management. These can include limitations on personalizing the space, pet policies, and other rules that may not align with your preferences. Additionally, renters are subject to rent increases and the uncertainty of lease renewals, which can lead to instability or the need to move more frequently.
Other Factors to Consider When Making Your Decision
When deciding whether to rent or buy near JBLM, also consider the following:
- Financial Readiness: Assess your financial situation, including savings, debt, and income stability. Ensure that you have a solid financial foundation before committing to homeownership.
- Future Plans: Consider your long-term plans and how they align with the commitment of buying a home. If many frequent moves are anticipated, renting might be a more suitable option.
- VA Loan Eligibility: Explore the benefits of VA loans, which can offer favorable terms for military homebuyers. These loans can provide financial advantages, such as no down payment and lower interest rates.
Resources for Military Families Moving to JBLM
For military families moving to JBLM, here are some resources to help you navigate the housing process:
- Access the JBLM Housing Services Office (HSO) website where you can also find information about BAH rates, mandatory briefings, hours of operation, and other necessary information. | HSO Bldg #5128, Pendleton Ave, Lewis Main | Email: [email protected] | Appointments: https://jblmhso.as.me/ | 253-967-3581.
- Visit Our Operation Red Dot Website: If you are not on our website already visit our pages for comprehensive guides and tools for researching neighborhoods and finding the right home. Our platform is designed to support military families in making informed housing decisions.
- Military-Knowledgeable Real Estate and Mortgage Wizards: Work with professionals who understand the unique needs of military families and can provide expert advice on buying or renting near JBLM. These experts can guide you through the complexities of the real estate and financing process.
Making the decision to rent or buy near JBLM requires careful consideration of your personal circumstances, financial readiness, and long-term goals. By weighing the pros and cons and utilizing available resources, you can make an informed choice that best supports your family’s needs and aspirations.
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