What Does $1,500 a Month Buy You: Renting vs. Buying In Allentown and Surrounding Areas

What Does $1,500 a Month Buy You: Renting vs. Buying in the Lehigh Valley:

When considering whether to rent or buy a home in the Allentown and surrounding Lehigh Valley areas, it's essential to understand what your monthly budget of $1,500 can get you in each scenario. Let's break down the costs and benefits of renting versus buying in this area.

Renting:

The median rent for all property types in Allentown, PA, including the 18103 ZIP code, is around $1,550 per month¹. This means that with a budget of $1,500, you are slightly below the median rent, but you can still find suitable rental options. Here’s what you can typically expect:

• 1-Bedroom Apartment**: Around $1,182 per month

• 2-Bedroom Apartment**: Around $1,654 per month

• Houses: Generally more expensive, averaging around $2,500 per month

Renting offers flexibility and fewer responsibilities regarding maintenance and repairs. However, you won't build equity, and rent prices can increase over time.

Buying Allentown and surrounding areas:

With a budget of $1,500 per month, including mortgage insurance and taxes, let's see how much home you can afford. Here are the key factors:

• Current Average Interest Rate**: Approximately 7.04% for a 30-year fixed mortgage.

• Down Payment: 3.5% for an FHA loan.

• Mortgage Insurance: FHA loans require an upfront mortgage insurance premium of 1.75% and an annual premium of 0.55%.

• Property Taxes: Around 1.6% of the home's value.

• Homeowners Insurance: Approximately $1,754 per year¹.

Given these factors, a home priced around $200,000 to $220,000 should fit within your $1,500 monthly budget. Here’s a breakdown:

Principal and Interest: Using a mortgage calculator, the loan amount that fits within the budget.

Property Taxes: Monthly property tax for a $200,000 home is about $267.

Homeowners Insurance: Around $146 per month.

Mortgage Insurance: Approximately $92 per month for a $200,000 loan.

Comparison

Renting: For $1,500, you can rent a decent 1-bedroom apartment or a smaller 2-bedroom apartment. Renting offers flexibility but no equity.

Buying: For $1,500, you can afford a home priced around $200,000 to $220,000 3br 1-2 baths with basement. Buying allows you to build equity and potentially benefit from property value appreciation.

Conclusion

Deciding whether to rent or buy depends on your financial situation, long-term plans, and personal preferences. Renting offers flexibility and fewer responsibilities, while buying can be a good investment and provide stability.

Would you like more detailed calculations or assistance with a specific scenario?

Source:

(1) Average Rental Price in Allentown, PA & Market Trends - Zillow. https://www.zillow.com/rental-manager/market-trends/allentown-pa/.

(2) Average Rent in Allentown, PA and Rent Price Trends - Zumper. https://www.zumper.com/rent-research/allentown-pa.

(3) Houses for Rent in Zip Code 18103 | HotPads. https://hotpads.com/18103/houses-for-rent.

(4) Houses For Rent in 18103 - 7 Homes | Zillow. https://www.zillow.com/allentown-pa-18103/rent-houses/.

(5) 18103 Housing Market: House Prices & Trends | Redfin. https://www.redfin.com/zipcode/18103/housing-market.

(6) 18103, PA real estate & homes for sale - realtor.com. https://www.realtor.com/realestateandhomes-search/18103.

(7) 18103, PA 2024 Housing Market | realtor.com®. https://www.realtor.com/realestateandhomes-search/18103/overview.

(8) ZIP Code 18103 Map, Demographics, More for Allentown, PA. https://www.unitedstateszipcodes.org/18103/.