Fast AF Summary
Owning a home in Kalamazoo, MI offers both financial and freedom benefits compared to renting. Homeowners in Kalamazoo can build equity and wealth over time, thanks to the appreciation of their property value and the forced savings aspect of homeownership. In addition, homeowners have greater freedom and control over their living spaces, including the ability to make modifications, own pets, and decorate as they see fit. These freedoms are simply not possible when renting, making homeownership a smart investment choice for those who value both financial security and personal independence in their living arrangements.
Debunking the Myths of Renting
n 2023, many Kalamazoo residents are facing the question of whether to rent or own a home. While renting may seem like a more affordable option at first, the truth is that in Kalamazoo, many rents are actually higher than mortgages. Plus, homeownership comes with a variety of benefits that renters miss out on.
A lot of the time, these reports are assuming things that aren’t realistic for the average household. For example, the methodology behind one of those reports says that renting is the smarter financial option because of the opportunity to invest money elsewhere. It assumes renters take the money they’d spend on costs tied to buying a home and put it in an investment portfolio.
But here’s the thing – most people who rent aren’t making those investments. Ken Johnson, Co-Author of the BH&J National Price-to-Rent Index, explains:
One of the difficulties with the rent and reinvest model is many people . . . simply rent and spend the difference. . . . That’s wealth destroying.
According to recent data, the majority of home owners in Kalamazoo realized 30% equity gains from 2020 to 2023. This means that by owning a home, residents are building wealth and financial security for themselves and their families.
While renting may offer more flexibility, it also comes with the uncertainty of rising rent prices and the possibility of having to move frequently. On the other hand, owning a home provides stability and the opportunity to build long-term equity.
40x Your Net Worth by Owning
Firstly, owning a home is an investment in a tangible asset that typically appreciates in value over time. This means that as the value of the home increases, so does the homeowner’s equity – the difference between the home’s value and the remaining mortgage balance. As a result, homeowners have a valuable asset that they can use to build wealth and financial security.
Secondly, homeowners benefit from the forced savings aspect of homeownership. When making mortgage payments, part of the payment goes towards paying down the loan balance, which increases equity. This means that homeowners are essentially saving money each month by paying down their mortgage, while renters do not have this benefit.
To illustrate this point, take a look at the graphic below. It shows two stacked columns, one representing homeowners and the other representing renters. The homeowner column is significantly taller, indicating that homeowners have a net worth 40 times higher than renters.
Thirdly, homeowners benefit from tax deductions, such as deducting mortgage interest and property taxes from their taxable income. This can reduce their overall tax burden and free up more money for savings or investing.
Finally, owning a home provides a sense of stability and security, which can have a positive impact on overall financial well-being. Homeowners are more likely to have longer-term financial plans and goals, and are generally more financially responsible than renters.
All of these factors contribute to why homeowners have a significantly higher net worth than renters. While owning a home requires a significant financial commitment, the potential long-term financial benefits are substantial, making homeownership a smart investment choice for those who are financially prepared.
Live Free from Landlords
Owning a home offers many freedoms that renters simply do not have. One of the most significant advantages of homeownership is the ability to make changes to your living space without seeking approval from a landlord or property manager. Homeowners have the freedom to decorate, paint, and customize their homes to their liking, without worrying about losing their security deposit or facing penalties for damage. This level of control over your living space is a major benefit of owning a home.
Another area where homeowners have greater freedom is in the ownership of pets. Many rental properties have strict rules and restrictions when it comes to pets, often limiting the size, breed, or number of animals allowed. In contrast, homeowners have the freedom to own any type of pet they choose, without having to worry about violating lease agreements or facing eviction. This allows pet owners to truly make their homes a part of their family, without limitations or restrictions.
In addition to these benefits, homeowners also have the freedom to make modifications to their homes to accommodate their changing needs. For example, homeowners can add extra rooms or bathrooms, install accessibility features, or create outdoor living spaces without worrying about violating rental agreements. This level of flexibility and control over one’s living space is a major advantage of homeownership.
Overall, owning a home offers greater freedom and control over one’s living space, allowing homeowners to make the changes and modifications necessary to create a comfortable and personalized home. This level of freedom is simply not possible when renting, making homeownership a smart choice for those who value flexibility and independence in their living arrangements.