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  • Writer's pictureLaura M. Johnson

Why Rent When You Can Own? The Surprising Benefits of Taking Control and Buying Your Home Today

Updated: May 24, 2023


Rental affordability has been a pervasive societal issue for years, with many people struggling to find affordable housing options. In many urban centers, the cost of renting has skyrocketed, making it increasingly difficult for low-income earners to find suitable accommodation. This has resulted in many individuals and families facing issues such as eviction, homelessness, and overcrowding. According to a recent report by the National Low Income Housing Coalition, there is currently no state in America where a minimum wage worker can afford a two-bedroom rental at the fair market rent. The situation has been exacerbated by the economic impacts of the COVID-19 pandemic, with many people losing their jobs or experiencing reduced shifts, thereby finding it even harder to keep up with rising rental costs. The lack of affordable rental options has serious implications for the economy, such as reduced workforce mobility and increased poverty rates. There is a clear need for governments and policymakers to work together to develop sustainable solutions to address rental affordability issues and provide suitable housing options for all members of society, regardless of their income level.


According to data from the Census, the cost of renting in the United States has increased consistently since 1988. On average, rents have gone up by more than 20%. This trend has been most pronounced in areas with high population growth and strong job markets. For instance, cities like San Francisco, New York, and Los Angeles have seen rentals rise by over 50% in the last 30 years. As a result, many people are finding it increasingly difficult to afford housing without sacrificing other necessities or accepting long commutes. The situation is particularly challenging for low-income households, who may be forced to live in substandard conditions due to a lack of options. This trend underscores the need for policymakers and community leaders to work on creating affordable housing solutions that can meet the needs of all residents.


According to the latest rental report from Realtor.com, rents are continuing to grow today, albeit at a slower pace than experienced at the height of the pandemic:


“In March 2023, the U.S. rental market experienced single-digit growth for the eighth month in a row . . . The median asking rent was $1,732, up by $15 from last month and down by $32 from the peak but is still $354 (25.7%) higher than the same time in 2019 (pre-pandemic).”

Since the onset of the COVID-19 pandemic, the housing market has undergone a massive transformation, with rents skyrocketing in many major cities across the world. This phenomenon can be attributed to several factors, including increased demand for rental properties due to people fleeing cramped urban apartments and the closure of many businesses. Additionally, the pandemic has caused a decrease in the supply of new rental units as construction projects have been put on hold or delayed. As a result, landlords are able to charge much higher rent rates than in pre-pandemic years.


Owning a home has long been considered the American dream, but there are many factors that go into deciding whether to buy or rent. However, if the long-term trend of rents increasing each year continues, owning your home may be the better option. When you own your home, you have more control over your living situation, and there is a greater sense of stability that comes with knowing you won't be subject to periodic rent increases. Additionally, buying a home allows you to build equity in an asset that can appreciate in value over time. If you are currently renting, it is worth taking a closer look at the housing market in your area to see if buying a home might be a more affordable and financially beneficial option in the long run. Ultimately, the decision to buy or rent will depend on your personal circumstances, but considering the potential benefits of homeownership is definitely worth exploring.


Homeowners with a fixed-rate mortgage have the advantage of locking in a monthly payment for the loan's duration, which is usually between 15 and 30 years. This means that the interest rate on the mortgage will remain the same throughout the life of the loan, regardless of fluctuations in the market. For example, if you take out a 30-year fixed-rate mortgage at 4% interest, your monthly payment will remain the same for the entire loan period, even if interest rates rise to 5%, 6% or higher in the future. This predictability can be especially beneficial for those on a fixed income or who prefer to budget their household expenses. Overall, homeowners with a fixed-rate mortgage can enjoy peace of mind knowing that their monthly payments will remain steady, making it easier to plan for the long-term and avoid financial surprises.


If you are wondering whether to continue renting or buy a home this year, there are several factors to consider. One of the key factors is your financial situation, including your credit score, income, and debt-to-income ratio. You should also take into account the current real estate market conditions in your area, including interest rates, home prices, and inventory. Buying a home can offer long-term financial benefits, such as building equity and potential tax deductions, but it also comes with additional costs and responsibilities such as maintenance, repairs, and property taxes. Renting, on the other hand, may provide more flexibility and less financial risk in the short term. Ultimately, the decision to rent or buy a home depends on your individual circumstances and goals. It may be helpful to consult with a financial advisor or real estate agent to help you make an informed decision.


From Cozy to Comfortable: Owning a Home Is More Affordable Than Renting for Those Who Need More Space


Owning a home can be more affordable than renting when considering two or more bedrooms:This may be due to various factors such as tax deductions, equity buildup, and lower monthly payments over time. For instance, if a family of four were to rent a two-bedroom apartment for $1,500 per month, they would end up paying $18,000 annually. However, if they were to purchase a home with a mortgage payment of $1,200 per month, they would pay $14,400 annually and also build equity in their home. It's important to note that affordability may vary depending on location, interest rates, and other personal financial circumstances. Overall, homeownership can offer financial benefits and stability for families looking to invest in their future.


The below graph provides a comparison between two options based on the national data of median rental payments. The data was collected from Realtor.com and NAR, providing an insightful analysis of the average rental prices across the country. According to the graph, NAR seems to have recorded lower rental prices in comparison to Realtor.com. This could be due to differences in methodology or sample sizes of data collected. However, it is noteworthy that the difference in rental prices among the two options is not significant, and the overall trend shows a stable and gradual increase in average rental prices over the years. This information could be useful for individuals looking to rent property or landlords interested in setting competitive rental prices. Overall, the rental market seems to be on a steady and upward trajectory, with slight fluctuations depending on location and other market factors:


As your family grows, you may start to feel cramped in your current living space. Whether you have children who need their own bedrooms or have aging parents moving in with you, accommodating everyone can become a challenge. That's when homeownership might make more sense. Owning a home can give you the flexibility and freedom to customize your living space to meet your family's needs without having to worry about restrictions from a landlord. For example, you could add an extra bedroom, create a home office or even build an addition to your home to accommodate your growing household. Additionally, owning a home provides stability and can be a wise investment for your family's future. While there are additional responsibilities that come with homeownership, such as maintenance and repairs, the benefits of having a space that truly feels like yours and can cater to your family's evolving needs may be worth it in the long run.


If you're in the market for a new home, you may be wondering whether a single-family home or a multi-unit building is right for you. While there are certainly advantages to apartment living – such as convenience and reduced responsibilities – there's something to be said for having your own space in a single-family home. For one thing, you'll have much more breathing room than you would in an apartment, both literally and figuratively. In a single-family home, you'll have more physical space to move around, spread out and relax in your own sanctuary. You'll also have more storage space, which can be critical if you have a lot of belongings, such as seasonal items like holiday decorations or sporting equipment. Additionally, a single-family home affords you the freedom to pursue your hobbies without worrying about disturbing your neighbors. Whether you love woodworking, playing music or working on classic cars, you'll have the space to do it without worrying about bothering anyone. Ultimately, whether a single-family home is right for you depends on your individual preferences and needs. But if space and privacy are important to you, it's definitely worth considering.


Building Equity Through Homeownership: The Ultimate Guide to Long-Term Wealth


Owning a home is often viewed as an important milestone in life, and for good reason. One of the biggest benefits of owning a home is the ability to build equity, which helps to grow your net worth over time. Equity is essentially the difference between the value of your home and the amount that you owe on your mortgage. As you make mortgage payments, you gradually pay down the principal balance of your loan, which increases the equity you have in your home. Additionally, if the value of your home increases over time, as it often does, then your equity also grows. For example, if you purchase a home for $200,000 with a $20,000 down payment, then you have $20,000 in equity from the start. As you make mortgage payments over the years, your equity will continue to increase, and if the value of your home rises to $250,000, then you would have $70,000 in equity. This equity can then be used for a variety of purposes, such as borrowing against it to finance other investments or projects, or even selling the home and using the proceeds to fund retirement or other goals. Overall, owning a home can be a powerful tool for building wealth and growing your net worth over time.


Owning a home is often associated with building equity, which refers to the amount of the property's value that you actually own. As home values typically rise over time and you pay off your mortgage, you build equity. For example, if you purchased a home for $300,000 and made a down payment of $60,000, you would start with an equity stake of $60,000. Over time, as you pay off your mortgage and the value of your home appreciates, your equity stake increases accordingly. This can be beneficial for homeowners in a number of ways, including providing a financial cushion in case of unexpected expenses or serving as a source of funding for major purchases or renovations. Building equity can also be a key component of long-term wealth-building strategies, as it allows homeowners to grow their net worth over time. While there are risks associated with home ownership, the potential for building equity is one of the many reasons why it continues to be a popular investment for many people.


Buying a home is likely one of the biggest financial investments you'll make in your lifetime. And while it may seem daunting, it can ultimately set you up for long-term success. One of the biggest advantages of owning a home is building equity, which is essentially the difference between your home's value and the amount you owe on your mortgage. As you pay down your mortgage, your equity grows, and this can translate to financial flexibility later on. For example, if you've built up a significant amount of equity in your current home, you may be able to sell and upgrade to an even bigger space down the line. This could mean moving to a more desirable neighborhood or purchasing a larger home that better suits your needs as your family grows. Ultimately, building home equity can provide the financial security needed to make these types of upgrades without sacrificing your overall financial health.


Millennial homeowners have become increasingly aware of the benefits of owning their own homes over renting, with many citing the desire to build equity as the top reason for their recent purchase. According to a survey by Bankrate, 68% of millennials who bought homes in the past year did so to build equity, while 24% wanted to have more space for their families and 15% wanted to take advantage of low interest rates. Owning a home allows individuals to build up wealth over time, as the value of the property increases and they pay off the mortgage. Additionally, renters are at the mercy of their landlords when it comes to rent increases and maintenance issues, while homeowners have more control over their living situation. For many millennials, owning a home is seen as a long-term investment that can lead to financial stability and security.


Building Home Equity: The Ultimate Key to Unlocking Wealth and Prosperity


With the rise in rental rates, especially in major metropolitan areas, more and more people are seriously considering buying their own home. Many experts say that low-interest rates and a strong economy make this the perfect time to invest in real estate. Monthly mortgage payments can often be cheaper than monthly rent payments, especially when you factor in the potential equity and tax benefits of homeownership. Renters might also experience frequent rent hikes, which can make budgeting difficult. Without a mortgage, renters are at the mercy of landlords who can charge whatever they want at lease renewal time. Buying a home provides a sense of financial stability and the freedom to make changes without needing permission.


Moreover, owning a home comes with a range of benefits, beyond just financial savings. Homeowners have more control over how they live, including customizing their space to suit their needs, having pets, or even starting a garden. Owning a home also provides a sense of pride and accomplishment, something that is hard to match with renting. However, home ownership also comes with its challenges. Maintenance costs, taxes, and the potential for unforeseen expenses can be daunting. Therefore, it’s important to thoroughly consider your options and consult with experts before making such an important decision. Nonetheless, for those who are financially prepared, now might be the perfect time to turn their dream of homeownership into a reality.


If you're currently weighing the decision between buying a home or continuing to rent, it can be overwhelming to navigate the pros and cons of each option. That's where I come in as your trusted assistant. My role is to help you explore your options and determine what makes the most sense for you and your unique situation. There are a lot of factors to consider, such as market trends, interest rates, monthly payment affordability, and long-term financial goals. For example, buying a home might make more sense if you plan on staying in one place for several years and want to build equity, while renting may be a better choice if you prefer more flexibility and less responsibility for maintenance and repairs. Ultimately, the decision is yours, but I'm here to provide guidance and support every step of the way. Let's connect and start exploring your options together.


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Citations


Hale, D., & Xu, J. (2023, April 25). March 2023 Rental Report: Midwest Surges as Western Markets Decline. Realtor.com. Retrieved May 1, 2023 from https://www.realtor.com/research/march-2023-rent/


NAR: Housing Affordability Index (2023, April 14). National Association of REALTORS®. Retrieved May 1, 2023 from https://cdn.nar.realtor/sites/default/files/documents/hai-02-2023-housing-affordability-index-2023-04-14.pdf


Ostrowski, J. (2023, April 12). Millennials and Homebuying: Real Estate Adapts to the Largest Generation. (T. Segal, Ed.). Bankrate. Retrieved May 1, 2023 from https://www.bankrate.com/mortgages/millennials-and-homebuying/


Quarterly Vacancies and Homeownership, First Quarter 2023. (2023, May 3). United States Census Bureau. Retrieved May 19, 2023 from https://www.census.gov/housing/hvs/files/currenthvspress.pdf


Wolf, A. (2023, March 21). What Is the Millennial Mindset on Owning Vs. Renting? As the Largest Living Generation in the U.S., Millennials Will Greatly Impact Housing Demand Going Forward. Builder Online. Retrieved May 1, 2023 from https://www.bankrate.com/mortgages/millennials-and-homebuying/

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