Is It Better To Rent Or Buy A Home … You Decide?
If you are thinking about “making a move” … you’ve probably asked yourself – Is it even worth trying to buy a home right now?
With high home prices and higher mortgage rates, renting can seem like the safer choice right now. Or perhaps, maybe your only choice. That’s a very real feeling. And perhaps buying today isn’t your best move; it’s not for everyone right away. You should only buy a home when you’re ready and able, and when the timing is right for you.
But here’s some facts to ponder on, if you are considering renting.
While it may feel like a safer bet today – and in some areas it may even be less expensive on a month-to-month basis than it is owning a home – but the fact of the matter is, looking at the BIG picture … it really can cost you much more over time. In fact, a recent Bank of America survey found that 70% of aspiring homeowners worry about what long-term renting means for their future … and they are not wrong.
Owning a home for many may seem like a far reach, but if you make a plan now, and steadily work towards it, homeownership will come with some serious long-term financial benefits over time.
Homeownership Builds Wealth Over Time
While buying a home is the American Dream, your family’s safehaven, a place for you to call HOME, and plant your families roots – it’s also step toward building your future wealth …
Why, you ask? Home prices typically rise over time, which means the longer you wait, the more expensive it will be to buy. And even in some markets where home prices are softening today, the overall long-term trend speaks for itself (see graph below):
Source: Census, HUD
And as home values rise, so does your equity when you’re a homeowner. That’s the difference between what your home is worth and what you owe. So, with every mortgage payment made, your equity grows. Over time, that becomes part of your net worth.
Today, the average homeowner’s net worth is nearly 40X greater than that of a renter. That’s a shocking difference, and the dollars in the visual below don’t lie. (see graph below):
Source: Federal Reserve Board’s Survey of Consumer Finances
And it’s one of the big reasons why Forbes says:
“While renting might seem like a less stressful option . . . owning a home is still the cornerstone of the American dream and a proven strategy for building long-term wealth.”
The Biggest Downside of Renting
So, short-term, why does renting feel like a simpler choice? Lower monthly payments, less responsibility, no strings attached … right? But in the long-term, it can really hurt you.
For decades, while home prices have been rising, rents has gone up too. And while rent has held rather steady more recently, history shows the overall trend is up which makes saving for a home more complicated than ever. (see graph below):
Source: Census
That kind of financial uncertainty rising rents could affect their current and long-term finances – which once again, they are not wrong … rent does not build wealth. It doesn’t come back to you later. It pays your landlord’s mortgage – not yours.
Don’t get me wrong there will be times where renting may make sense, or perhaps may be your only option. But if you are ready and in a position to buy a home … given the choice – ask yourself this one question … “Whose mortgage would you like to pay, yours or your landlords?”
Renting vs. Buying: What Really Matters
Think of it this way … Renting means your money is gone once you pay it. Owning means your payment builds your equity. Yes, buying a home comes with responsibility. But it also comes with many rewards from a home security standpoint, and of course the financial equity gains you will enjoy while building generational wealth.
If homeownership feels out of reach for you today, feel free to reach out to me. I would be happy to have that conversation with you.
I am here and happy to help!
HIGHLIGHTING OUR LOCAL BUSINESSES
I can’t speak highly enough about Barnosky’s Carpentry/Kevin Barnosky, Owner. Kevin was recommended to me by a Home Inspector who I recommend quite often to my clients – Brian Johnson of Huntington Home Inspections – top-notch in his field. So I knew any recommendation that came from Brian, could only be the best! Well, I was right!! Kevin and his guys could not be more talented at what they do, polite and professional. Top Notch in their field, and I would not hesitate to recommend them to anyone looking for a carpenter who truly knows their business! Kevin can be reached at 860-483-0713.
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Laura
The Key To Your Real Estate Success
Helping buyers & sellers achieve their real estate goals.