The decision to buy a home instead of continuing to rent is one that we all have to consider at some point in our lives. While there was a time where the positives and negatives of each choice would end up being decided by personal preference, there are trends in the housing market currently that are seeing homebuying become the preferred option.
But what happened to make the balance shift towards owning instead of renting?
Rent Is Rising, Interest Rates Are Dropping
Rent is seeing sharp increases throughout the United States, outpacing the growth of income in many communities. While the balance of inflation and income has always been a topic of discussion, the sheer speed at which rent is rising has broken away from conventional inflation.
As the economy strives to fully recover from the pandemic, property owners are having to charge more for rent and lenders are dropping rates to attract new customers to help stimulate the housing market once again. With rates being so low, the monthly payments for a mortgage on a home are becoming lower and lower compared to renting a similar property. These rates won’t stay around forever though which is why locking in a mortgage now can save you thousands every year for the term of your loan. How else does homebuying beat out renting when it comes to your housing?
You Can Build Equity Within Your Budget
Purchasing a home with such low interest rates also means being able to build equity while still saving on monthly payments. The median price of single-family homes has steadily risen over the last two years with no signs of stopping. Even if the property you’ve had your eye on has gone up in price, the interest rate savings you’ll get can even it out or possibly even save you money.
Once you have the home purchased, you’ll be able to watch as its market value increases and equity is created without making a single extra payment. This can help those unsure about where they want to live forever be able to still make a nice profit as they purchase homes to test out different regions or neighborhoods.
Affordability Is Finally Accessible
If you’re concerned about finding a property you can get approved for, it’s important to be aware of increases to how much lenders can offer on conforming loans which will be your traditional mortgages. Remember, even if you pay more for the home you’ll be seeing immense savings from lower interest rates.
The last area we want to touch on is the ability to earn extra income from your property once you own it! It’s true that rent is still rising, but platforms such as Airbnb are seeing an influx of homeowners looking to help others find affordable living. They can charge just below the average rent for the area and be able to bring in more income to help cover a large chunk of the monthly mortgage payment.
So there we have it. The current state of the rent vs. purchase considerations while we go through unprecedented times. The window for purchasing a home to reap all of the above benefits will start closing as everything returns to normal so we encourage anyone interested to reach out to our specialists here on the Potempa Team to find out what you could qualify for today.
