I have come to realize that many people believe, in the current real estate market in Reno, it is less expensive for their family to rent a home than buy one. In fact, Freddie Mac recently conducted a study that revealed 82% of renters believe they are saving money by renting. While everyone’s circumstances are different, in the long run it is usually not less expensive to rent if you are in a position to purchase a home.
Although it may seem less expensive to rent, if you are looking to contribute to your long term net worth, home ownership may be a valuable path for you to consider. The typical wealth of the average homeowner in the US in 2018 was $231,420, a stark contrast to the $5200 average wealth of a renter.
So, while you may think it is less expensive to rent because you avoid major maintenance costs, taxes, and insurance, the truth is that your landlord has factored those costs into your monthly payment.
According to Bankrate, in cities with the highest populations of renters, home ownership would cost about the same as what they are already paying monthly for rent. Assuming you have financed with a conventional fixed rate mortgage, owning a home gives you peace of mind that your monthly housing expenses will never increase, you will not be forced to move, and the money you are putting into your investment will stay yours and be returned to you when you decide to sell. Utilizing first time home buyer assistance to get into a home and putting the same amount you are already paying for rent toward your mortgage, could have you well on your way to financial security.
On average, millennials today are spending a whopping 45% of their income on rent, with 25% spending at least half of their income on rent. When you own real estate, you are able to grow your net worth by building equity in your home, instead of paying off someone else’s mortgage and maintenance expenses.
It is certainly true that home ownership is not right for everyone. For example, some require the flexibility of moving for their profession every few months. In cases such as this, real estate may not be the best or most convenient investment.
It is always wise to speak with financial professionals and loan consultants to get an accurate picture of your financial situation. If you need help sorting through the different options for home ownership, renting, buyer assistance programs, or finding professional financial resources, I am here to help.