Homeownership still offers advantages over renting. Faced with college loan debt and a tight labor market, many Millennials in their 20s & early 30s are putting off purchasing a home. According to U.S. Census data, homeownership for Americans under age 35 declined to 36.2 percent in the first quarter of this year. Another 36 percent of young adults ages 18 to 31 live in their parents’ home. Others rent – which raises the question, “Does it make more sense to rent or buy?”
Buying a home still makes sense. Although increasing home prices in some areas might make renting seem attractive, homeownership offers many benefits – financial and otherwise. In a recent NY Times article by Neil Irwin “thanks to low interest rates and home prices that remain 13 percent below their 2006 peak nationally, buying continues to look like a good deal in much of the country.”
Here are 5 Advantages of Buying over Renting Although every market and every prospective buyer are different, some things are true across the board, here are some benefits of buying a home and some disadvantages of renting long-term:
1. Equity: In the past 20 years, the median sales price of existing single-family homes rose 81 percent. For those who plan to stay in the same place for at least five to seven years, the increase in value can often offset the costs of buying the home. When that equity grows, the homeowner may be able to borrow against it for major purchases or educational expenses.
2. Predictable payments: Rent payments can increase steadily or suddenly. This is especially true in areas where rentals are very competitive, making rent payments higher than mortgage payments. With a fixed-rate mortgage, buyers pay the same amount each month no matter how many years they live in the home.
3. Tax deductions: Most homebuyers can deduct mortgage interest and property taxes on their tax returns. Those who work at home may also be able to take home-office deductions.
4. Control: Unlike renters, homeowners can paint their walls any color they want and don’t need to ask a landlord for permission to hang pictures, renovate or make other improvements. For many, that’s priceless.
5. Pride of ownership: Purchasing a home is an investment, but also so much more. It’s a lifestyle choice and continues to be part of the American dream. Owning a home and making reasonable improvements over time can strengthen your financial position in the long-term.
If you are thinking about buying, your first call should be to an experienced Realtor, the second to a Mortgage Advisor who can help you better understand all your financing options. Contact me if you’re ready to begin your exploration of opportunities!