Considering whether to continue renting or buy a home this year? Here's something to think about. Rental affordability has been a persistent challenge for years, with rents consistently increasing over time. Census data from 1988 onwards shows a steady climb in rents.
Even today, the latest rental report from Realtor.com reveals that rents are still on the rise, albeit at a slower pace compared to the peak of the pandemic. In March 2023, the U.S. rental market saw single-digit growth for the eighth consecutive month, with the median asking rent at $1,732 – a $15 increase from the previous month. Although it's $32 lower than the peak, it remains $354 (25.7%) higher than the same time in 2019 before the pandemic hit.
Given the significant increase in rents from pre-pandemic years, it may be advantageous to consider homeownership. Homeowners with a fixed-rate mortgage can secure a predictable monthly payment for the entire duration of their loan, typically spanning 15 to 30 years. If the trend of increasing rents each year persists, owning a home could be a more favorable option.
Owning a Home Could Be More Affordable if You Need More Space
We've gathered national data from Realtor.com and the National Association of Realtors (NAR) to create a graph that compares the median rental payment to the median mortgage payment. The results may surprise you. If you require two or more bedrooms, our graph clearly shows that owning a home is typically more affordable than renting. It's time to weigh your options and make an informed decision.
If you need more space for your household, belongings, or hobbies, homeownership may be the perfect solution for you. Find a place with two or more bedrooms and enjoy the freedom to spread out and make it your own.
Owning a Home Allows You to Build Equity
Owning your home has several benefits beyond just providing shelter. Not only does it protect you from increasing rent costs, but it is also a more affordable option when you require more space. Additionally, owning a home allows you to start building equity, which in turn increases your net worth.
As time goes on, home values tend to rise, and as you pay off your mortgage, you continue to build equity. This equity can be advantageous in the future as it can be used to support a move to a larger living space. In fact, according to Zonda, the top reason why millennial homeowners purchased their homes in the past year was to build their own equity rather than someone else's.
If you're pondering the decision between buying a home or renting, it would be wise to consult with Scott Smolen and he can help you explore your options. With rental prices on the rise, pursuing homeownership to fulfill your dream might be a more sensible choice.
