You may be watching the news or listening to home buyers say, “it’s better to rent right now,” or “we’re just going to rent until the housing prices drop”. While there is a lot of information that they aren’t sharing with you about what is actually happening in your local marketplace, there is one important piece of info they aren’t considering. Now is actually a great time to be a buyer! Homeownership is typically viewed as a great long-term investment and can help you grow your net worth over time.
Homeownership Builds Wealth Regardless of Income Level
You may be surprised to learn homeowners across various income levels have a much higher net worth than renters who make the same amount. Data from First American helps illustrate this point (see graph below):
What makes wealth so much higher for homeowners? A recent article from Realtor.com says that “Homeownership has long been tied to building wealth—and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”
Basically, the wealth you accumulate when you own a home has a lot to do with equity. As a homeowner, you build up equity as you pay down your loan and as home prices appreciate over time. Mark Fleming, Chief Economist at First American, explains how this same benefit isn’t true for renters in a recent podcast. “Renters, as non-homeowners, gain no wealth benefit as home prices rise. That wealth actually accrues to the landlord.” By renting, you are essentially helping your landlord gain more wealth while you are just spending money.
Before you decide to sign another rental agreement, now is a good time to think about whether it would be better for you to buy a home instead. The best way to figure out what makes sense for you is to have a conversation with Stafford Family Realtors. We can discuss your options and talk you through the benefits that come with buying a home and help determine what the best steps would be for your situation.
If you're not sure whether to keep renting or to buy a home, know that owning a home, no matter how much money you make, can help build your wealth. Let Stafford Family Realtors help you to find not only your home but your next investment.