Why Buying a Home Makes More Sense Than Renting Today
Are you torn between renting or buying a home this year? It's a common dilemma, especially here in the North Bay Area where rental affordability has been a challenge for many years. Historically, rents trend upwards, and according to the Census, rents have been steadily climbing since 1988. Even today, rents continue to grow, albeit at a slower pace than during the height of the pandemic.
The latest rental report from Realtor.com shows that “In March 2023, the U.S. rental market experienced single-digit growth for the eighth month in a row . . . The median asking rent was $1,732,up by $15 from last month and down by $32 from the peak but is still$354 (25.7%) higher than the same time in 2019 (pre-pandemic).”
With Marin rents much higher now than they were in more normal, pre-pandemic years, owning your home may be a better option, especially if the long-term trend of rents increasing each year continues. In contrast, homeowners with a fixed-rate mortgage can lock in a monthly mortgage payment for the duration of their loan (typically 15-30 years).
Owning a Home Could Be More Affordable if You Need More Space
The graph below uses national data on the median rental payment from Realtor.com and median mortgage payment from the National Association of Realtors (NAR) to compare the two options. As the graph shows, depending on how much space you need, it’s typically more affordable to own than to rent if you need two or more bedrooms:
So, if you’re looking to live somewhere where you have two or more bedrooms to accommodate your household, give you more breathing room to spread out your belongings, or dedicate the extra space to practice your hobbies, it might make sense to consider homeownership.
Homeownership Allows You To Start Building Equity
In addition to shielding you from rising rents and being more affordable when you need more space, owning your home also allows you to start building your own equity, which in turn grows your net worth.
And, as home values here in Marin County continue climbing and you pay off your mortgage, you'll build equity. That equity can set you up for success later on because you can use it to help fuel a move to an even bigger space down the line. That’s why, according to Zonda, the top reason millennial homeowners bought their home over the past year was to build their own equity instead of someone else’s.
If you're struggling to decide whether to buy a home or continue renting, it's worth exploring your options. With rents on the rise, pursuing your dream of homeownership may be a more viable option. Let's connect to discuss further.