The end goal and priority for many Americans is to become a homeowner. For a while it was believed that millennials would rent forever and weren’t interested in buying houses; However, millennials now make up the largest group of homebuyers. So what changed? The truth is that nothing changed. Like other generations, becoming a homeowner is aspirational for millennials.
However, millennials were slower because they were faced with a weaker economy and it was more difficult to save for a new down payment. Currently, the typical shift from renting to buying is in the early 30s. Although becoming a homeowner is desirable for the masses, there are many appeals to renting and people who prefer it.
There are many benefits to renting. Here are some of the most common reasons people pick renting over buying:
High prices and low inventory of houses to buy
Preferred location and onsite amenities
Flexibility
Less time and energy spent on maintenance
So, why do a majority of people want to buy a home? Here are some of the appeals of homebuying:
It is a good investment
More space
Privacy
Increasing rent prices
Here are some factors to consider when deciding whether you should rent or buy:
Life Plans- The recommended time of owning a house to build equity is at least five years. But, life plans are unexpected and you may want to move or grow your family within a short amount of time. If this is the case then renting might be for you.
Affordability- Buying a house is more affordable than renting.
Inflation- Owning a home can hedge against inflation.
Cash Flow- There are a lot of moving elements to buying/owning a house that require you to have cash reserves.
Cost- Homeowners have more costs beyond mortgage principal and interest.
Taxes- Homeowners can receive additional tax breaks.
Risk tolerance- There are risks to both renting and buying. You could potentially own a house that loses value. On the other hand, rent can increase and your landlord can choose not to rent to you anymore.
Which Is Best For You? Ask yourself the following:
Where do you want to live?
How long do you want to live there?
What are the local market conditions?
What are your personal lifestyle preferences?
What are financial circumstances and plans?
From the May/June issue of Success Magazine.
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