Renting a house might be more cost-effective than buying one
If the current housing market has you debating whether it makes more sense to rent or buy a property, take this into account. Rental costs have also surged in recent years, in addition to property prices. According to a recent story on realtor.com:
“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.”
This means that your housing plans will almost certainly be affected by rising prices. However, there are a few significant distinctions that can make purchasing a home a more advantageous choice for you.
Purchasing a home could be more affordable if you require more space.
You might be surprised to learn that, based on the most recent information from realtor.com and the National Association of Realtors (NAR), depending on how many bedrooms you require, buying may actually be cheaper than renting. The median rental and mortgage payments made nationwide are depicted in the graph below to illustrate why.
According to the graph, even if prices are rising, purchasing a property may be more cost-effective if you require two or more bedrooms. According to national statistics, it may be more inexpensive to buy than rent for that unit size, even though this doesn't account for the interest deduction or other financial benefits that come with house ownership. So, if needing more room is one of the things driving you to relocate, this can be the extra push you need to think about buying a home.
Owning a home offers stability and the chance to increase your wealth.
Depending on the number of bedrooms you require, purchasing may also be more inexpensive. Buying also has the advantages of equity and stable payments.
With a fixed-rate mortgage, you can secure your monthly payment when you purchase a property. And in the inflationary economy of today, that is extremely crucial. With inflation, the cost of everything increases, including groceries, gas, and other items. Your housing payment, which is probably your biggest monthly expense, can be fixed, which can give you more long-term stability and protect you from future price increases. This is how a recent CNET story describes it:
“…if you buy a house and secure a fixed-rate mortgage, that means that no matter how much prices or interest rates go up, your fixed payment will stay the same every month. That’s an advantage over renting since there’s a good chance your landlord will raise your rent to counter inflationary pressures.”
Not to add, when you purchase, you have the opportunity to increase your equity, which raises your net worth. This is how it functions. Your equity increases as you pay down your mortgage over time and as house values rise. And if you decide later on that you need a larger home, that equity may make it simpler to move into one in the future. Once more, the CNET article is helpful in explaining:
“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home that you can tap into later on. When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”
To sum up
Let's talk about your options if you're attempting to decide whether to buy a house or continue renting. If you have the means, it can make more sense to purchase a home because you'll have home equity and a protection against inflation.