Is It Better to Rent or Buy Right Now?
- Homeownership remains one of the best ways to build long-term wealth
- The cooling housing market is causing bidding wars for rental units
- Our experienced team of dedicated agents will help you secure a home!
The Cost of Rent Is Rising
Recent reports on current conditions in the real estate market have highlighted a new trend developing in today’s heated market: rising rents. In addition to increasing rental costs, bidding wars within the apartment and housing rental market are increasingly becoming commonplace, with some offering hundreds of dollars more than the asking price.
If you’ve been renting and wondering if buying a home instead of renting would be a better use of your money, the good news is that, yes, buying a house is still a better use of your money. So let’s take a closer look at what’s happening in today’s market and why buying a home remains the better option for building your wealth versus renting.
Why is rent increasing?
According to real-estate company Redfin, the median U.S. asking rent passed $2,000 for the first time in May, and it has risen 15% over the past 12 months. While bidding wars have long been a staple of hot housing markets, where buyers compete with offers above the seller’s listing price, these contests are now becoming more commonplace in the rental market.
Historically, rents have risen in step with home prices. As home values rise, renters become more likely to stick to renting, taking pressure off home prices and demands on the housing supply. The push and pull between these two facets of the housing market keep the two markets roughly in balance.
However, an increasing number of white-collar professionals are reluctant to buy because of record-high home prices, rising mortgage rates, and the limited supply of housing that is continuing to haunt the global housing market. As a result, many have said they are renting instead, helping drive a frenzy for leased properties of all kinds and helping fuel the trend of offering above asking rents, which isn’t helping anyone. Real-estate agents from New York to Chicago and Atlanta say they see more people making offers above asking to lease homes and apartments they will never own.
To rent or to buy? It’s not that complicated!
As anyone who has ever rented will tell you, when it’s time to renew your lease, there is an expectation that the cost of rent will increase. Usually, the new monthly rental price will rise nominally, and it’s not that big of a deal for renters to absorb the increase. However, in today’s market, nearly every usual trend has been upended, and renting is no exception. Yet as more individuals experience sticker shock as they renew their rental agreements, with some increases being several hundred dollars more a month, many have begun to question the efficacy of renting for their future.
So as more frustrated buyers retreat from the market and steer toward renting, the savvy move to be made right now is buying a home. Homeownership remains a stable long-term investment despite the higher mortgage interest rates, because owning a home comes with certain tax benefits that renting does not, helping your money go further. Benefits such as deductions on mortgage interest, discount points, mortgage insurance, and property taxes will reduce your taxable income and help you keep more of your hard-earned money.
Another factor to keep in mind is that as the housing market cools off and bidding wars in the rental market increase, the price of homes is beginning to see price reductions from the seller’s side of the market, which indicates that now is a terrific time to consider becoming a homeowner.
Secure Your Future
Serious buyers understand that waiting will cost them more later. They should approach today’s competitive market of rising rates and low inventory as a motivating factor to buy sooner, not a reason to wait. Let’s connect today to see what homes are in your budget, prepare you to become a homeowner, and start building your wealth sooner rather than later.