For previous generations, buying your own home was the quintessential American dream. But nowadays, millennials, who make up a majority of today’s working force and have the largest spending power, are opting to rent homes rather than buying them. In fact, the US House ownership rate is at 63.7%—not far from the lowest rate (63.4% in 2015) recorded since the 1960s.
With rising home costs and interest rates, different priorities, and a preference for a more mobile lifestyle, it can seem like all signs work against purchasing a home. Even so, here are the top 3 reasons why you should buy a home (instead of renting) now.
When it comes to deciding whether to purchase or rent a home, cost is the biggest factor that comes into play. The cost associated with putting up a sizeable down payment to keep mortgage costs low, or just the thought of taking another loan from the bank, can make most people—especially risk-averse and price-sensitive millennials—second-guess their decision to purchase a home. This is especially true if they have other debts to pay off.
However, if you're planning to stay in an area for a long time, buying a home may save you big bucks in the long term. According to the 2017 Rental Affordability Report, buying is cheaper than renting in 66% of the American housing market.
The upfront costs may be large, and mortgage payments daunting, but homeowners also get breathing room in the form of tax breaks.
Another reason to purchase a home is that it is a good investment.
Real estate will always be a good investment, because along with food and clothing, shelter is another one of man’s most basic needs. As the population grows, the demand for homes also grows. When you invest in the real estate market, you can earn a profit either by renting your property out or selling it at a profit.
Besides selling your home at a higher price in the future (real estate, after all, is an asset that will appreciate over time), the business-savvy know that you can earn money from your home—even when you aren't using it. With the popularity of platforms like Airbnb, people who purchase homes to rent out can actually pay off their property through the income they earn, offsetting recurring costs associated with home ownership: like maintenance, insurance, and mortgage.
On the other hand, renters don't have to worry about recurring costs or maintenance and repairs because the landlord handles these as part of a fixed monthly rent cost. While this is convenient for short-term renters, those that have been staying at a place for a long enough time will have shelled out a substantial amount of money paying for property that will never truly be theirs.
Another advantage of owning your own home is never worrying about where to live, and having the freedom to design your place as you wish, and acting the way you want and not having to worry about others people's temperaments.
On the other hand, renters may face eviction in circumstances such as the local government ordering building closure, or if the tenant violates the terms of the lease. There is little room for freedom in terms of changing the space’s design. You also have to learn to be tolerant about other people’s quirks, so if you're a renter that likes the quiet but has a noisy neighbor, you have to learn how to deal with that.
Final Thoughts: Home Ownership vs Renting: Top Reasons to Buy Now
Although buying a home requires a large upfront payment and includes several associated/recurring costs, such as maintenance, it is more worth it in the long run—especially if you treat it like an asset. Besides that, buying a home will give you security about never worrying where to live, and the freedom to design as you please.