In Kalamazoo - Yes
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. In our opinion the most important item to pay attention to is the amount of money that you’re paying down another persons mortgage with and the use of the equity in your home that you could tap into, in the future.
Space is Cheaper in a House
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:
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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:
Saving on your monthly living expenses could provide a bump to your savings account.
For example, saving $500 a month totals out to $6,000 saved in year.
Should you Rent , or Buy?
Benefits of Owning a Home vs. Renting in Kalamazoo
1. Invest in your home, not your Landlord
Each time you make a payment on your house, your house’s equity increases. For that reason, your home’s valuation grows together with your monthly mortgage payments. And the more you care for your house and fix your abode, the more your house will boost in value.
2. Mortgages are Cheaper
A monthly home mortgage expense is generally less than what you would expect to pay in rent for the typical apartment. Think on it: It would be a smart move for you to invest in a 3, 4, or even 5-bedroom home, because by comparison, the monthly mortgage cost is typically lower than what you would pay for a 1, 2, or even 3-bedroom rental home.
3. Tax benefits.
As a homeowner, you’re eligible for a tax credit for your home’s interest payments, property taxes, and improvements when you file your taxes each year.
Where to Go From Here
If you’re trying to decide whether to keep renting or buy a home, reach out to us to explore your options.