Fredericksburg TX: Why Some Renters NEVER Buy… and Why Some Buyers NEVER Rent
The math and mindset behind both choices—local edition.
Renting isn’t “throwing money away” when ownership costs outpace value and flexibility.
With elevated mortgage rates and premium Hill Country prices, renting in 2023–2024 often penciled out cheaper—buying shines again if your horizon is long or your down payment is big.
Should You Rent or Buy in Fredericksburg? Why Renting Might Make Sense in 2023–2024
- Ownership perks: equity growth, stability/control, potential tax benefits.
- But in 2023–2024: At ~7% mortgage rates and premium local prices, monthly ownership often ran $600–$700 more than comparable rent.
- Strategy: Rent to save cash and watch rates; buy when payment + horizon + reserves align (or when you have ≥20% down).
Table of contents
1) Why Buying Is Still Attractive
- Equity & investment: Principal paydown + long-run appreciation create net worth.
- Stability & control: Fixed P&I; renovate/landscape without approvals.
- Tax perks: Mortgage interest and property taxes can be deductible (speak with a CPA).
Key nuance: The shorter your holding period, the less time you have to overcome higher upfront costs and early interest-heavy payments.
2) 2023 Example: Rent vs. Buy Math
Case study (late 2023): Same-home comparison using real listing signals to illustrate the gap at ~7% rates.
- Rental: 1606 Redwood Court · 3BD/2.5BA ~1,600 SF · List $3,000/mo, likely negotiable to ~$2,700–$2,800 after 130+ days on market.
- Implied value: ~$420,000 (Redfin-style estimate).
- Buy scenario: 5% down ($21,000) · 7% rate · Start Oct 2023 → Payment roughly ~$3,400/mo (PITI + PMI).
Monthly gap: ~$600–$700 more to own vs. likely rent → $7,000–$8,000/year delta. Early amortization is interest-heavy (>$2,300/mo), so equity builds slowly at first.
3) Rate Moves & Timing
Many forecasts in late 2023 pointed to potential easing toward ~5% in 2024. At 5% with 5% down on ~$420,000, total payment could dip under $3,000/mo—rent-competitive.
- Rent now, buy later: Bank savings; monitor rates/inventory; pounce when payment fits your comfort zone.
- Refi path: If you buy high-rate, plan a refinance once feasible (ensure you can carry payments meanwhile and budget closing costs).
4) What If You Put 20% Down?
Bigger down payments remove PMI and drop the loan amount, materially lowering monthly cost and risk.
≤5% Down
- Higher monthly; PMI applies.
- Max flexibility to keep cash for reserves/repairs.
- Best for long horizon + refi plan later.
≥20% Down / Cash
- No PMI; meaningfully lower monthly.
- Opportunity cost on cash; but immediate stability.
- Buying sooner can make sense if you’ll stay put.
5) Bottom Line & Playbook
- Short horizon (1–3 yrs): Renting often wins on flexibility and lower monthly outlay.
- Long horizon (7–10+ yrs): Buying can outperform as equity compounding overtakes early costs.
- Savvy path: Build reserves (3–6+ months), track rates/inventory, get preapproved, and be ready to act.
Context check: This guide reflects late-2023/2024 dynamics for Fredericksburg. Always rerun today’s numbers (rate, taxes, insurance, HOA) on the specific property you’re considering.
FAQs
Is renting really cheaper than buying in Fredericksburg?
In many late-2023 cases, yes—by ~$600–$700/mo on like-for-like homes at ~7% rates. The answer flips as rates fall, prices shift, or with bigger down payments.
What costs do first-time buyers overlook?
Closing costs, PMI, maintenance, potential HOA, higher insurance, and property tax adjustments after purchase. Build a cushion.
When does buying beat renting?
Longer hold (7–10+ years), favorable rate/price combo, or ≥20% down. Also when lifestyle control and stability are top priorities.
Should I wait for rates to drop?
Waiting can help the monthly payment—but if prices rise or inventory tightens, the benefit can shrink. Model both rate and price scenarios.
Want a live rent vs. buy breakdown for your situation?
I’ll run today’s rates, taxes, insurance, HOA, and your down payment—plus refi scenarios—so you can choose confidently.
Get your custom analysisTranscript
So what if I told you here in Fredericksburg, Texas, you could live in the home of your dreams without the nightmare of a 30 year mortgage hanging over your head? Intrigued? Well, stick around, because today we are flipping conventional wisdom on its head and talking about why renting a home may beat out buying a home at the end of 2023 and the beginning of 2024. Welcome back to the channel guys. Ryan Renton here. Rent and Realty Group, your favorite realtor right here in the Texas Hill Country. If you're new to the channel, make sure you hit that subscribe button. But also ring that bell so you never miss the insider scoop on what's happening here in the Texas Hill Country. So before we dive into why renting a home may be a better fit for you for the rest of this year and going into 2024, let's discuss some of the benefits of buying a home that you just do not get when renting. Benefit number one is it's a financial investment. Owning allows you to build equity in the property, which can become a valuable financial asset. Your mortgage payments can help you own a piece of property, potentially offering a long term return on investment, especially if the property appreciates in value. The second benefit is stability and control. As a homeowner, you have control over your living environment. You can renovate, decorate, and even add to the property as you see fit. And additionally, with a fixed rate mortgage, your monthly payments remain stable, giving you financial predictability that renting can't offer. And then the third benefit is tax benefits. Homeowners often qualify for tax advantages like deductions on mortgage interest and property taxes, which can provide a level of financial relief that renters don't get. And these benefits can make a significant difference over time. So if there are such great benefits to owning home, why in the world would it be better for some of you to rent right now? Well, a lot of it has to do with the numbers and the basic math. So let's go ahead and dive into a real life example. So the number one place to look for a rental house is on Zillow. There's no sugarcoating that. That is just the place to look. Okay. So let's go ahead and look at this rental property here on 1606 Redwood Court. And the reason why we're looking at this home in particular is because it's the most similar to the type of home that you can buy for right around that median sales price here in Fredricksburg, which is 540,000 as of July. Now, realistically, this house would sell for under 500,000, but all the other rental houses we currently have on the market are much older or just way too big. But this is a nice three bedroom, two and a half bath with just over 1600 square feet. And it appears to have, you know, all the new modern finishes that a lot of people are looking for nowadays. And I'm sure a lot of you are going to be thinking, Holy cow, for $3,000 a month, I'm only getting 1600 square feet. Well, this house has been on Zillow for over 130 days and is still active and available. So I think it's ultimately probably going to end up renting out for under 3000 a month. I would say maybe around 27, $2,800 a month, but that's actually going to prove my point even more so once we get to the mortgage side of what you'd be paying for if you were to buy this home. Okay, so for this exercise, what we're going to do is hop on to the Redfin estimator, plug in the address and see what this house is potentially worth. Now, I must say that the Redfin calculator can be off on the low side, but also on the high side of what a home can be worth. Any home for that matter. But for this example, I just want to show you what the difference would be on the mortgage side if you were to own it and what it would cost you to rent it. So according to the website 1606 Redwood is worth 420,000. So now what we're going to do is hop onto a mortgage calculator, which are all kinds of mortgage calculators out there. All you have to do is hop on to Google and search for a mortgage calculator. But for this example, what we'll do is go ahead and start filling in this calculator, starting off with the home's value at 420,240 for a 5% down payment and an interest rate of 7%. Now, interest rates have been a little bit higher than this. But for this example, let's go ahead and bring that down to 7% just to have a nice even number. And we'll have this loan start in October and we'll go ahead and fill in the property taxes, the PMI, the home insurance and then hit calculate. So what you're going to immediately tell is that you're actually saving money. If you were to rent this house rather than buying it today. And especially if this home ends up renting out for right around that $2,800 a month, that's going to be roughly 650 bucks per month that you're going to keep in your back pocket. Now, again, there's a lot of benefits to owning this home, just owning a home in general. But let's go ahead and break this down just a little bit further. So another thing to consider when buying a home is the thing called the amortization schedule. So this schedule is a table that breaks down each mortgage payment into its components, the principal and interest. In the early years of the mortgage, a greater portion of the monthly payment goes towards paying off the interest of the loan. And then as time progresses, the balance gradually shifts. Will more of your payments go towards reducing their principal rather than your interest? So looking at the example for this house here on Redwood Court, in the beginning, you have over $2,300 a month that's going towards the interest, leaving you just over $300 a month. That's actually going towards the house. So you're really not building much equity towards the beginning of your loan, because so much of your monthly payment is going towards that interest. But on the other hand, home values here in the Texas Hill Country have continued to grow and rise over the years. So you will be building equity that way. But let's just say that the interest rates do drop back down next year like the experts are predicting. Let's just call it 5%. You will now be paying less than $3,000 a month for this house here on court. So this is something to think about. Now, once again, on the other hand, if you are thinking about putting more money down, let's call it 20% or more. Or if you're thinking about paying cash for your next property here in Fredericksburg, I would say now is still a great time to buy because your monthly payment won't be near as high for putting more money down. And obviously, if you're paying cash, all you have to worry about is those property taxes and insurance. And I would just remember this the decision to either buy or rent a home is a deeply personal one with factors that are unique to you. Okay, guys, I want to hear from you down in the comments below. What are your thoughts about buying or renting a home in today's market? And if you are thinking about buying and or selling anywhere around the Texas Hill Country, I would love to be a realtor of choice. All my contact information is above, but also down in the description. And make sure you watch this next video. I think you're really going to like it. We'll see you in the next video.