Rent vs Buy

Brad Cohen November 10, 2023

Contemplating the rent-versus-buy dilemma? A critical data point from the Federal Reserve Board's Survey of Consumer Finances (SCF) might just tip the scales. The latest report reveals a staggering difference in net worth between homeowners and renters, with homeowners boasting a net worth nearly 40 times greater. Despite current mortgage rates, there are compelling reasons to consider homeownership, emphasizing the long-term gains it offers. 

Home Values Appreciate

Recent fluctuations in home prices might raise concerns, but a broader view reveals a consistent upward trend over the past 60 years. While there were exceptions, like the 2008 housing crash, overall, home values have steadily risen. Buying now positions you to benefit from increasing home values, building equity over time and enhancing your net worth.

Escape Never-Ending Rent Hikes

Renters often grapple with the frustration of yearly rent increases. The steady climb of rents over the past six decades is a testament to this challenge. Opting for homeownership allows you to lock in stable monthly housing costs, freeing you from the perpetual cycle of rent hikes.

Your Housing Payments are an Investment

Ultimately, your housing payments are an investment, and the choice is yours – invest in yourself or your landlord? By becoming a homeowner, you invest in your future, building equity and avoiding the money drain of rent payments. Recently, homeowner net-worth has skyrocketed. One major factor is the surge in home equity, driven by the unprecedented rise in home prices during the recent 'unicorn' years for housing. The imbalance between supply and demand, coupled with record-low mortgage rates, led to a substantial increase in home values. Homeowners who rode this wave experienced substantial growth in their equity.

As Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), emphasizes, the decision between renting and buying should consider the total cost of homeownership versus the financial benefits. The latest Fed data reinforces this point, with the median net worth of homeowners reaching $396,200, compared to renters at $10,400.

In conclusion:

Despite current mortgage rates, buying a home offers numerous benefits over renting. When it comes down to it, buying a home offers more benefits than renting, even when mortgage rates are high. If you want to avoid increasing rents and take advantage of long-term home price appreciation, let’s connect to go over your options.

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