Often times, the first question asked by anyone seeking a new residence is “ should I rent or buy?” For almost the last decade the trend has been to buy, according to Diana Olick at CNBC, an American business broadcast channel. However with rapidly rising home prices and increased mortgage rates recent trends have shown a shift from home ownership into home rentals. Here’s Why.
- Home Ownership Prices Are On The Rise: During the market crash of 2008, the decline in home prices stacked on top of lower than average mortgage rates led to the increased appeal of buying and owning a home. However in the last 10 years, the costs of owning a home has risen significantly by up to 14% monthly. This increase is due to an overwhelming demand for houses with little supply. On average the cost of buying a home is cheaper than renting in only 35% of all U.S counties compared to 44% in 2018.
- Rental Fees accrue slower: While home ownership costs have accumulated rapidly in the last 10 years, rental rates have only risen by 4%. This is beneficial to many renters because only 41% of Americans in a medium-income earning family can afford to purchase and own a home listed at a median list price, according to Danielle Hale, the Chief Economic Realtor at Realtor.com. Due to rising home ownership rates on the rise, the demand for apartments is up 11% compared to the demand in July of 2018. Although the increase in demand of rentals is the cause of the consistent climbing of rental rates, 82% of renters still believe renting is the more convenient and affordable option according to a survey conducted by Freddie Mac Home Financers.
- Rentals Can Be A Better Investment: According to new research by Florida Atlantic University, on average, the amount of savings from renting will out perform home equity building and home ownership in terms of wealth creation. This presents an investment opportunity to current homeowners looking to downsize and rent out their homes. However, some areas in the Midwest and Northeast may still be more beneficial to own depending on rental rates and absence of HOA Fees according to Forbes.com
If you are looking to reside in a property with slowly rising rental rates while making a sound investment, renting a home may be the option for you. To determine which option is best for you and your finances, it may be best to seek out an experienced realtor who is familiar with the trends of the current rental market. For an always fast, always professional, and always responsive company who can handle all your rental questions and concerns contact the experts at Rent It Network.