The Advantages of Buying Over Renting

Are you thinking about buying a home? While today’s mortgage rates might seem a bit intimidating, here are two solid reasons why, if you’re ready and able, it could still be a smart move to get your own place.

1. Home Values Typically Go Up Over Time

There’s been some confusion over the past year or so about which way home prices are headed. Make no mistake, nationally, they’re still going up. In fact, over the long-term, home prices almost always go up (see graph below):

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Using data from the Federal Reserve (the Fed), you can see the overall trend is home prices have climbed steadily for the past 60 years. There was an exception during the 2008 housing crash when prices didn't follow the normal pattern, but generally, home values kept rising.

This is a big reason why buying a home can be better than renting. As prices go up and you pay down your mortgage, you build equity. Over time, this growing equity can really increase your net worth. The Urban Institute says:

“Homeownership is critical for wealth building and financial stability.”

2. Rent Keeps Rising in the Long Run

Here’s another reason you may want to think about buying a home instead of renting – rent just keeps going up over the years. Sure, it might be cheaper to rent right now in some areas, but every time you renew your lease or sign a new one, you’re likely to feel the squeeze of your rent getting higher. According to data from iProperty Management, rent has been going up pretty consistently for the last 60 years, too (see graph below):

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So, how can you break the cycle of rising rents? Buying a home with a fixed-rate mortgage allows you to control your housing costs and avoid those pesky rent increases. That degree of stability is significant.

Your housing payments are like an investment, and you have a choice to make. Do you want to invest in yourself or continue paying your landlord?

Owning a home is an investment in your own future. And even if renting is less expensive, the money you pay each month is gone forever.

As Dr. Jessica Lautz, Deputy Chief Economist and VP of Research at the National Association of Realtors (NAR), says:

“If a homebuyer is financially stable, able to manage monthly mortgage costs, and can handle the associated household maintenance expenses, then it makes sense to purchase a home.”

Bottom Line

If you're tired of your rent going up and want to explore the many benefits of homeownership, let’s talk about your options.

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