Renting vs. buying: Who knew owning was almost 12% cheaper?
Renting versus buying your first house: Many renters are shocked to hear that owning costs less than it used to -- and requires less income.
These are the highlights:
Historically, it's been a tossup between renting and buying a house. But as we're experiencing an unprecedented recovery of the housing market, today's numbers are much different.
The percentage of income required to rent a median-priced house sits at 27.8 percent, compared to the 15.9 percent required to purchase. Now, the choice is easy.
The amount needed to afford a home at median price is decreasing, while the amount needed to rent continues to rise. Record-low mortgage rates also make buying a home more attractive, offering a buying power increase.
Not owning a house can cost more than you think
As Zillow recently reported, housing has become an even bigger priority amidst the pandemic:
"In 2020, homes went from the place people returned to after work, school, hitting the gym or vacationing, to the place where families do all of the above. For those who now spend the majority of their hours at home, there's a growing wish list of what they'd change about their homes, if possible."
In addition to this growing need for more indoor and outdoor space, there are at least five financial reasons to consider homeownership:
Homeownership works like forced savings.
It gives you tax breaks.
It helps you lock in your monthly cost of housing.
It'll cost you less than renting.
It's the only investment you can live in.
Then there's the fact that research shows that a homeowner's net worth is 44 times more than the worth of a renter. One argument in favor of renting is that it cuts the cost of home repair and taxes, but it helps to remember that all these expenses incurred by a landlord are already lumped into your monthly rent payment — plus any profit they make.
You might be surprised how much you can save
Today's housing market is filled with opportunities, and renters are taking advantage. Historically low mortgage rates are giving many first-timers more buying power than they expected.
