Rent vs. Buy Archives - Page 4 of 4

The U.S. Homeownership Rate Is Growing

The desire to own a home is still strong today. In fact, according to the Census, the U.S. homeownership rate is on the rise. To illustrate the increase, the graph below shows the homeownership rate over the last year:

That data shows more than half of the U.S. population live in a home they own, and the percentage is growing with time.

If you’re thinking about buying a home this year, here are just a few reasons why so many people see the value of homeownership.

Why Are More People Becoming Homeowners?

There are several benefits to owning your home. A significant one, especially when inflation is high like it is today, is that homeownership can help protect you from rising costs. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“In the 1970s, when inflation was running around 10%, home prices were rising at approximately the same rate. Renters actually have a harder time in inflationary periods, because rents tend to rise along with inflation, whereas mortgage payments stay the same for homeowners with fixed-rate mortgages.”

When you buy a home with a fixed-rate mortgage, you can lock in what’s likely your biggest monthly expense – your housing payment – for the duration of that loan, often 15-30 years.

That gives you a predictable monthly housing expense that can benefit you in the short term, but you’ll also gain equity over time as your home appreciates in value and you make your monthly mortgage payment.

And with that growing equity, your net worth will increase as well. In fact, the latest data from NAR shows the median household net worth of a homeowner is roughly $300,000, while the median net worth of renters is only about $8,000. That means a homeowner’s net worth is nearly 40 times that of a renter.

Bottom Line

The U.S. homeownership rate is growing. If you’re ready to purchase the home of your dreams, let’s connect so you can begin the homebuying process today.

Buying a Home May Make More Financial Sense Than Renting One

August 3, 2022/in First Time Home Buyers, For Buyers, Pricing, Rent vs. Buy /by Bradley Mayhew

If rising home prices leave you wondering if it makes more sense to rent or buy a home in today’s housing market, consider this. It’s not just home prices that have risen in recent years – rental prices have skyrocketed as well. As a recent article from realtor.com says:

“The median rent across the 50 largest US metropolitan areas reached $1,876 in June, a new record level for Realtor.com data for the 16th consecutive month.”

That means rising prices will likely impact your housing plans either way. But there are a few key differences that could make buying a home a more worthwhile option for you.

If You Need More Space, Buying a Home May Be More Affordable

What you may not realize is that, according to the latest data from realtor.com and the National Association of Realtors (NAR), it may actually be more affordable to buy than rent depending on how many bedrooms you need. The graph below uses the median rental payment and median mortgage payment across the country to show why.

As the graph conveys, if you need two or more bedrooms, it may actually be more affordable to buy a home even as prices rise. While this doesn’t take into consideration the interest deduction or other financial advantages that come with owning a home, it does help paint the picture that it may be more affordable to buy then rent for that unit size based on nationwide averages. So, if one of the factors motivating you to move is a desire for more space, this could be the added encouragement you need to consider homeownership.

Homeownership Also Provides Stability and a Chance To Grow Your Wealth

In addition to being more affordable depending on how many bedrooms you need, buying has two other key benefits: payment stability and equity.

When you buy a home, you lock in your monthly payment with your fixed-rate mortgage. And that’s especially important in today’s inflationary economy. With inflation, prices rise across the board for things like gas, groceries, and more. Locking in your housing payment, which is likely your largest monthly expense, can provide greater long-term stability and help shield you from those rising expenses moving forward. Renting doesn’t provide that same predictability. A recent article from CNET explains it like this:

“…if you buy a house and secure a fixed-rate mortgage, that means that no matter how much prices or interest rates go up, your fixed payment will stay the same every month. That’s an advantage over renting since there’s a good chance your landlord will raise your rent to counter inflationary pressures.”

Not to mention, when you buy, you have the chance to build equity, which in turn grows your net worth. It works like this. As you pay down your home loan over time and as home values continue to appreciate, so does your equity. And that equity can make it easier to fuel a move into a future home if you decide you need a bigger home later on. Again, the CNET article mentioned above helps explain:

“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home that you can tap into later on. When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”

Bottom Line

If you’re trying to decide whether to keep renting or buy a home, let’s connect to explore your options. With home equity and a shield against inflation on the line, it may make more sense to buy a home if you’re able to.

Should I Rent or Should I Buy? [INFOGRAPHIC]

July 15, 2022/in First Time Home Buyers, For Buyers, Infographics, Rent vs. Buy /by Bradley Mayhew

Some Highlights

It’s worth considering the many benefits of homeownership before you make the decision to rent or buy a home.
When you buy, you can stabilize your housing costs, own a tangible asset, and grow your net worth as you gain equity. When you rent, you face rising housing costs, won’t see a return on your investment, and limit your ability to save.
If you want to learn more about the benefits of homeownership, let’s connect today.

How Homeownership Impacts You

June 2, 2022/in First Time Home Buyers, For Buyers, Move-Up Buyers, Rent vs. Buy /by Bradley Mayhew

June is National Homeownership Month, and it’s the perfect time to reflect on how impactful owning a home can truly be. When you purchase a house, it becomes more than just a space you occupy. It’s your stake in the community, an investment, and a place you can put your stamp on.

If you’re thinking about buying a home this year, here are some of the benefits you’ll experience when you do.

The Emotional Benefits of Homeownership

Because it’s a place that’s uniquely yours, owning a home can give you a sense of pride and happiness in several ways.

Your Home Can Reflect Your Tastes and Personality

Investopedia puts it like this:

“One often-cited benefit of homeownership is the knowledge that you own your little corner of the world.”

That knowledge can lead to a powerful, emotional connection to the place where you live. But so can the realization that your home will grow with you. Because it’s yours, you have the freedom to make updates to it as your needs and tastes change. As Logan Mohtashami, Lead Analyst for HousingWire, says:

“The psychology is that this is yours and you’re going to make it as good as possible because you’re in for a long time, . . . “

And that can create a greater sense of ownership, pride, and connection with your home and your community.

It Can Enhance Your Neighborhood and Civic Engagement

Homeownership can lead you to get even more involved with your local area. After all, you’re putting your roots down in a location and will want to do what you can to help improve it, much like your home. In a recent report, the National Association of Realtors (NAR) says:

“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”

The Financial Benefits of Homeownership

When you choose to become a homeowner, you’re making a financial decision as well. That’s because your home is also an investment.

It Can Help You Feel Financially Stable

Homeownership is truly one of the best ways to improve your long-term financial position. Not only will you have a predictable monthly housing expense that can benefit your budget in the short term, but you’ll also gain equity as your home appreciates in value and you make your monthly mortgage payment. As Freddie Mac says:

“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

It Can Grow Your Wealth

Because of your growing equity, you can build your net worth as a homeowner. And when you compare the difference in net worth between a renter and a homeowner, it’s clear that owning a home truly offers a great way to build your long-term financial position.

According to the latest data from NAR, the median household net worth of a homeowner is roughly $300,000, while the median net worth of renters is only about $8,000. That means a homeowner’s net worth is nearly 40 times that of a renter.

Bottom Line

Homeownership is truly a way to find greater satisfaction and happiness and to build financial freedom. If National Homeownership Month has you dreaming about purchasing a home, then let’s connect to begin the process today.

How Homeownership Can Bring You Joy

May 18, 2022/in First Time Home Buyers, For Buyers, Rent vs. Buy /by Bradley Mayhew

If you’re trying to decide whether to rent or buy a home, you’re probably weighing a few different factors. The financial benefits of homeownership might be one of the reasons you want to make a purchase if you’re a renter, but the decision can also be motivated by having a place that’s uniquely your own.

If you want to express yourself by upgrading and customizing your living space but are feeling held back by your rental agreement, it might be time to consider the perks of owning your home.

A Little Change Can Bring Lots of Joy

There’s a significant level of pride that comes from owning a home. That’s because it’s a space that truly belongs to you.

A recent report from the National Association of Realtors (NAR) shows making updates or remodeling your home can help you feel more at ease and comfortable in your living space. NAR measures this with a Joy Score that indicates how much happiness specific home upgrades bring. According to NAR:

“There were numerous interior projects that received a perfect Joy Score of 10: paint entire interior of home, paint one room of home, add a new home office, hardwood flooring refinish, new wood flooring, closet renovation, insulation upgrade, and attic conversion to living area.”

The report also breaks down just how much each of these projects can enhance your emotional attachment to your home, even leading you to want to spend even more time in the space (see graph below):

And while many of the items NAR highlights are larger tasks, some, like painting rooms, are much smaller. Even those quicker projects can still bring you a greater sense of joy and accomplishment. Not to mention when you make upgrades in your home, you could be increasing its value which also gives your net worth a boost if you invest your time and effort wisely.

You’re Free To Update Your Home to Your Heart’s Content

These types of updates can result in additional happiness when you complete them, but there’s another reason you can feel good as a homeowner. In most situations, you’re free to renovate or update the interior of your home without needing additional permission. But as Business Insider points out, renters may not have the same freedom:

“Your landlord won’t always approve changes when you rent. But you have the power to update the home when you’re the owner. (Just make sure any big changes are approved by your homeowner’s association, if necessary.)”

If you do make changes as a renter, there’s a good chance you’ll need to revert them back at the end of your lease based on your rental agreement. That can add additional costs when you move out. That’s one major benefit of owning your own home. Unless there are specific homeowner’s association requirements, you typically won’t have to worry about the changes you can and can’t make.

Bottom Line

Deciding whether to rent or buy is a personal decision. The financial benefits are critical, but don’t overlook the emotional impact homeownership can have. Let’s connect to discuss all the benefits you can enjoy when you purchase your own home.

A Key To Building Wealth Is Homeownership

March 28, 2022/in First Time Home Buyers, For Buyers, Housing Market Updates, Rent vs. Buy /by Bradley Mayhew

The link between financial security and homeownership is especially important today as inflation rises. But many people may not realize just how much owning a home contributes to your overall net worth. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:

“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.”

Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.

Owning a Home Is a Building Block for Financial Success

A recent NAR report details several homeownership trends and statistics, including the difference in net worth between homeowners and renters. It finds:

“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”

To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter (see visual below):

The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.

Equity Gains Can Substantially Boost a Homeowner’s Net Worth

The net worth gap between owners and renters exists in large part because homeowners build equity. As a homeowner, your equity grows as your home appreciates in value and you make your mortgage payments each month.

In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.

To sum it up, NAR says it simply:

“Homeownership has always been an important way to build wealth.”

Bottom Line

The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, let’s connect today.

The Many Benefits of Homeownership

March 22, 2022/in First Time Home Buyers, For Buyers, Rent vs. Buy /by Bradley Mayhew

The past two years have taught us the true value of homeownership, especially the stability and the feeling of accomplishment it can provide. But homeownership has so much more to offer. Here’s a look at a few of the non-financial and financial benefits of owning a home. If you’re looking to buy a home today, think about all the ways homeownership can impact your life.

Homeownership Has Impactful Personal and Emotional Benefits

Owning your home gives you a significant sense of pride because it’s a space that is truly yours. And as a homeowner, you can customize your home to your heart’s desire. Having a space you’ve put your stamp on enhances the pride and sense of ownership you may feel.

And that sense of ownership can extend beyond your shelter to help create social, community, and civic benefits as well. That’s because the average homeowner stays in their home for longer than just a few years. That means you’ll naturally feel a stronger connection to the community around you the longer you live there. This can help you experience a greater sense of belonging and a greater stake in your community as a whole. As the National Association of Realtors (NAR) says:

“Living in one place for a longer amount of time creates an obvious sense of community pride, which may lead to more investment in said community.”

Owning a Home Is a Significant Step Toward Financial Stability

In a financial sense, homeowners benefit from home price appreciation, equity gains, and having a shield against some of the effects of inflation. These benefits can have a big impact on your life. As you gain equity through home price appreciation and paying down your mortgage, you build your net worth. And in times of inflation, your 30-year fixed-rate mortgage can help you stabilize one of your largest monthly expenses for the duration of your loan.

Lawrence Yun, Chief Economist for NAR, explains how you can start to see these lasting effects of homeownership as soon as you make your purchase:

“Owning a home continues to be a proven method for building long-term wealth. . . . Home values generally grow over time, so homeowners begin the wealth-building process as soon as they make a down payment and move to pay down their mortgage.”

Knowing you’ve made a good investment soon after your purchase is powerful. And that may give you confidence in your decision to buy a home.

Bottom Line

The benefits of owning a home are foundational. As a homeowner, you can feel proud of the space you call home and know you’ve made a sound financial investment. To learn how homeownership can help you, let’s connect to start the conversation today.

Are You Wondering if This Is the Year To Buy a Home?

March 16, 2022/in First Time Home Buyers, For Buyers, Rent vs. Buy /by Bradley Mayhew

Are You Wondering if This Is the Year To Buy a Home? | Simplifying The Market

Every year, many renters ask themselves the same question: Should I continue renting, or is it time to buy a home? If you’re a renter, chances are you’ve asked yourself that question at least once, and it’s likely because you’ve faced an increase in your monthly housing costs over time. After all, according to Census data, rents have risen consistently for decades.

To make an informed and powerful decision, the first step is understanding what’s happening in today’s housing market so you can determine which option is the better long-term financial decision for you.

Rents Are Going Up Again This Year

Rents are skyrocketing right now. Data from realtor.com shows just how much rental prices are surging throughout the country. The graph below highlights rental unit price increases over the past year:

If you’re a renter and plan on signing a new lease, your monthly costs are likely to go up when you do. Those rising costs can have a big impact on your financial goals, including any plans you’re making to save for a home purchase.

Homeownership Offers Stable Monthly Costs

Of course, one of the key benefits of owning your home is that you’re able to lock in and stabilize your payments for the duration of your loan. That’s not the case when you rent.

While rents are already on the rise, there’s a good chance many people will see their rental costs increase even more this year. As Danielle Hale, Chief Economist at realtor.com, says:

“With rents already at a high and expected to keep going up, rental affordability will increasingly challenge many Americans in 2022. For those thinking about making the transition from renting to buying their first home, rising rents will remain a motivating factor. . . .”

So, if you’re ready to become a homeowner, waiting any longer may not make financial sense. Instead, escape the cycle of rising rents and enjoy the many benefits that come with homeownership today.

Bottom Line

Starting your journey towards homeownership can pay off significantly this year. If you’re financially ready today, let’s connect so we can discuss your options.