The decision to rent or buy a home can be a very big one, and there are plenty of factors that go into making it. While owning a home was a top priority 10 or 20 years ago, renting is now very common.
In fact, Pew Research shows that “more US households are renting [today] than at any point in 50 years.” That doesn’t mean there aren’t any perks to owning your own home. It just means you’ll have to weigh the pros and cons based on where you are in your life.
What’s the real estate market like in 2019?
As recently as ten years ago, there seemed to be a rush among millennials to own their own homes. That rush caused a housing shortage, interest rate hikes, and less than affordable conditions. Something happened in recent years, however, that slowed it down: blame it on the new mobile workforce trend or the need to be ready for change. Whatever the reason, it’s clear that something has changed.
This new trend has made the housing market a little more favorable toward the buyer. Sellers are looking to unload their properties for lower prices because of the shortage of buyers. And mortgage companies are offering much lower interest rates than they have in the past.
Which is cheaper?
Housing prices are different in every part of the country. An apartment in Manhattan, New York could easily cost $7,000 a month, while a similar unit in Charlotte, North Carolina will seldom cost more than $1,500.
These prices could be comparable to mortgage rates, depending on where you live, but there are other expenses with owning a home you don’t usually have with renting. For one thing, when you own a home, you’ll probably have to cough up some insurance fees. These can run higher in some areas than others. You’ll also have to pay property taxes: these are calculated based on a certain percentage of your home’s value.
Lastly, you’ll be responsible for repairs if you own your own home. One of the nicest things about renting is that your landlord takes care of things if something goes wrong. On the flipside of this, however, is the fact that mortgages are easier to qualify for right now and the rates are much more favorable.
Of course, these will vary from state to state. Some hard money lenders in Texas might be able to finance a property for under four percent, while New York’s could climb above it. If your amount of monthly expenses is your deciding factor in whether to own or rent, be sure to take everything into consideration.
Advantages of owning a home
There are certain advantages to owning a home that you don’t get with renting. For example, many people can make extra money off their homes by renting them out. They might find mountain land for sale in North Carolina and build a second house on the property to rent, or they might just rent out their own home when they’re away on vacation. This money can, in turn, pay off their mortgage or at least part of their expenses.
Another advantage of owning your own home is the tax break. You may have to pay property taxes each year, but you could also deduct quite a few expenses on your return. The other big advantage is that you have equity in your property. In other words, you can eventually sell it and get back all or a portion of what you put into it.