Have you been thinking about buying a home, but aren’t sure it’s worth the investment with this rising market? You’re not alone. While it’s time for millennials and Gen Z to take their turn at the housing market, many potential buyers feel priced out of the market. And it’s not for lack of wanting. In fact, a recent survey found among millennials, 65% view homeownership as a top sign of success – even beating out a successful career, retiring, or having children.
Sure, the low prices of 2020 and 2021 definitely helped. The National Association of Realtors (NAR) reports that millennials now make up 43% of homebuyers, the most of any generation, at the moment. But as home sales face a slow and potential homebuyers start to debate their next move for this upcoming spring, it’s good to look at the facts. The cost of renting is higher than ever with no return on investment. Is it time to buy? Let’s get into it.
Rent is Aggressively Rising
Inflation is causing prices to skyrocket all across the board – from gas to groceries, and most notably rent. As of this past August, it was reported that the average monthly rent in the United States was $2,090, a 12.3% rise from the previous year. Altogether, a huge difference from the start of the pandemic, when the national average was $1,660.
It’s also worth mentioning the rise in rents are due to high demand with low supply, partly because businesses are buying up properties, and landlords are having to raise prices to match costs (like higher gas prices). In fact, one report shows 72% of landlords plan to raise the rent on one or more of the properties within the next year. In the long run, the New York Times thinks these rent increases may start to slow in early 2023, but it’s not going to return to anything near pre-pandemic levels.
So if today’s rent is pushing the budget, buying might be a long-term solution to set your future self up for success.
Homeownership Builds Wealth
Did you know homeowners actually have a higher net worth? According to KCM, the average household net worth for homeowners in 2022 was $300,000 – as opposed to renters with $8,000. Hear me out. If you buy a home with appreciating value, then every time you’re making a monthly payment on your property, it’s going to come back to you. When you make a monthly payment to your landlord, that money is just gone forever. Investing in your property acts like a forced savings mechanism where you build equity as you pay down.
Make a Deal That Doesn’t Break Your Budget
Buying a home for the first time can be complicated. There’s a lot of jargon, time, negotiations and legal paperwork that goes into it. That’s why it’s important to work with an expert that you trust, from preapproval to closing.
When you start the homebuying process, you might be surprised to learn there are ways to get an affordable interest rate, like through a mortgage buydown, or that you might not need as big of a downpayment as you originally thought. Baird & Warner is stacked with a one-stop shop team that can help explain it all to you, from finding a loan that works for you with Key Mortgage to closing the deal with Title Services. If this year is your time to buy, let’s talk.