Our family faced the impact of this when I accepted a call to serve in Tucson, AZ after four years in Tennessee: we had purchased a home in Tennessee in 2007 (just before the "housing bubble" burst), and refinanced it for incredibly low terms just a year before moving. Because of our refinanced loan, we saved a lot of money on our mortgage with a payment reduced by more than $200 a month—but we also had almost no equity, which gave us very little room for negotiation on the price. That, coupled with the fact that two very similar homes on our street were short-selling for more than $20K less than what we had to get as the final price meant that our efforts to sell our home failed miserably. We ended up staying in a small guest house in Arizona for eight months while we sought to rent our house instead, and then faced the challenges of renting (which are too many to address in this post).
I know another pastor who invested well in home after home (following one call to the next), and over the years established a great amount of equity—so much, in fact, that he and his wife were able to build the home they wanted shortly after accepting a new call in Florida in 2005. That home is now still more than $100K "under water" and every penny of equity they had gained over more than 30 years of ministry is gone. This is a perfect illustration of how home-buying is not the investment that it was for past generations.
This is just one example of why housing can be such a difficult matter of decision for a pastor in transition. For a pastor or candidate who is blessed with being unencumbered by an existing mortgage, important decisions about their future housing are afoot. A church that provides a manse or parsonage (which are fewer and fewer, sadly—and perhaps reviving this time-tested tradition would be a way around the problem entirely!) offers a deferment, of sorts, on the decision, but most pastors will eventually face a single important question: rent or buy?
There are more than mere fiscal considerations at play here. For example, about a year into my ministry at the church in Tennessee, one of the members affirmed that buying our house sent a clear signal to the congregation: we were coming to settle in and stay a while. That congregation had been through great turmoil in the years leading up to my pastorate, and the very existence of the church was precarious; this message was one small but vital piece of my ministry to them, and brought stability in ways I had not considered.
There may be other non-financial reasons to buy (or to rent), but the financial factor is a big part of the decision regardless. In our transition to Tucson, the reality was that buying another home was simply not a possibility (there may technically have been a way to do it once we had rented our home for a while, and the rent we received was seen as income—but we had neither the inclination nor the resources to own properties in two states).
In light of this, we recommend a new tool published in the New York Times website's "The Upshot" section offers a "rent vs. buy" calculator that allows multiple points of data input, with a very straightforward reporting of whether it makes more sense to rent or buy. (The report doesn't prescribe, but rather offers a recommendation along the lines of, "if you can rent for less than $xxxx / month, then renting is better.")
You can find—and use—this tool here: Is It Better To Rent Or To Buy?
There's no way to know how long the Times will keep this great resource available; for as long as it is, though, it will be very useful for pastors (and others).
In case it isn't (or if you want to look at other related information and calculators), we have a collection of Transition Tools on this website that will help you calculate:
- What your monthly payment would be
- How much home you can afford to buy
- How much you can borrow
- Rent vs. Buy (a different calculator)