Is buying a home better than renting? Real estate agents often hear renters say that homeownership is “too stressful.” Renters claim they would rather rent than buy because they don’t want the stress of costs and ongoing maintenance. There certainly can be more costs, responsibilities and upkeep as a homeowner.
Zillow recently published its annual Rental Consumer Housing Trends Report for 2022. The report states, “Rent as a percentage of income has risen steeply.” Which clearly we have all noticed. The typical market rate rent across the U.S. is nearly 60 percent of the annual median household income among renters! A landlord is clearly the only one benefiting from this scenario.
Of course, a Realtor promotes homeownership because they make more money when a customer purchases a house versus finding one to rent. However, that is not the underlying reason why they encourage people to buy a home. Below is a list of some of the many benefits:
- Building Equity. Essentially a form of forced savings that can grow over time.
- Stability. More control over where you live and for how long.
- Appreciation. Real estate has historically appreciated over time.
- Tax Benefits. Deductions for mortgage interest, property taxes and certain home related expenses.
- Predictable housing costs. Monthly housing costs remain stable over the long term, making it easier to budget.
- It’s collateral. Home equity can be used to secure loans or lines of credit, offering financial flexibility when you need to borrow money for home improvements, college costs, etc.
- Pride of Ownership. Homeowners feel a sense of accomplishment and pride.
- Inheritance. Owning a home can be passed down to heirs, providing a legacy for your family.
There are many benefits to owning a home. According to the National Association of Realtors, America’s largest trade association, “Homeownership correlates to higher educational achievement, civic engagement, better health and happiness and lower crime.”
The thing to remember always is the value of appreciation over time, building equity and personal wealth, as well as the reality that rates can come down. If that happens, homeowners can refinance to lower their monthly payment. Rental rates rarely decline.
The decision to rent vs. buy isn’t just an economic one – there are a lot of factors including responsibility to maintain a property, cash to handle unexpected expenses and of course, flexibility. Despite the potential for added costs and responsibilities, there are compelling reasons to consider owning a home. Do your research and find a licensed local Realtor who can help guide you through this process.