It is without saying that these past few years have taken some unexpected turns, and 2022 is no exception within the marketplace. Unfortunately, the housing market has not escaped the shocking turn with steep rising costs. With the rise in house prices, costs have skyrocketed. According to Zillow.com, "California home values have gone up 21.2% over the past year." To find out more about why housing costs have jumped, click here.
And if you're looking for some relief in renting, the rise in housing prices also raises the rent price. According to The Washington Post, "Nationally, rents rose a record 11.3 percent last year, according to real estate research firm CoStar Group. That fast pace of growth remained elevated in the first months of 2022, as many parts of the country continued to notch double-digit jumps in rent prices."
So what should we do? Is this the time to rent or bite the bullet and invest in owning? Although there may not be a "one size fits all" when it comes to choosing to rent or own, below, we have compiled some viewpoints on each and will let you decide the best option for your current situation.
Should I Buy a Home?
Of course, owning your home has its perks, such as you own it! So you get to decide what paint colors, flooring, or landscaping you want your home to have! And with the investment side of it, it seems like a "no brainer," but with the rise in the prices of houses and mortgage rates, it has perplexed even the most determined "home-buying influencers" if this is the right time to buy. However, many experts agree that according to the housing forecast, buying a home vs. renting a home is still the more sensible financial decision to make if you can afford it. Here are some reasons why:
The Housing forecast has led experts to agree that the housing market will not decline anytime this year. Home equity is a significant benefit, if not "the" benefit, to owning a home vs. renting. The rising cost of housing will mean more money in your pocket later. And having a home equity line of credit (HELOC Loan) as an option can put your mind at ease! The equity in your home could be just what one needs when wanting to pay off debt, maybe cover the cost of a wedding or a big vacation! Just a bought a home that may need some major improvements? Obtaining a HELOC with your home's equity will help pay for that next considerable expense.
*If you have questions or want to learn more about a HELOC Loan, click here.
•Fixed housing costs
Buying a home with a fixed-rate mortgage means your mortgage payments will be the same each month for the duration of the loan. This will put your mind at ease instead of worrying about a possible rise in your rent payment when it comes to renewing your lease.
•Build a better credit rating
Financing your home and paying your bills on time can significantly increase your credit score.
•Ability to claim a mortgage interest deduction on your taxes
According to the IRS, "You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness." To find out more information about this, click here.
Should I Rent a Home?
Although buying a home is encouraged due to its investment purposes, for some, it is not an option to buy a home at this current state and time. If this is you, then don't fret! Here are some reasons you may want to keep renting, and if you want to buy a home in the future, keep your head up and let this be your "planning" stage.
•Save up for more of a down-payment
Housing prices are high! And if you don't have enough money for a down payment, then find a lower rent price so that you can put money aside and "buy time" while putting money aside for a future down payment on a home.
•Wait for home prices to come down
As they say, "what goes up must come down" (one can only hope!), and if so, how long do we need to wait? No one can know, but experts expect it won't come down anytime soon. However, if you find an affordable monthly rent payment that allows you to save for that future down payment, then once the prices do come down, you can "strike and gain" when you're ready!
•Housing inventory is low
A low housing inventory could mean more limited choices in what your heart desires, and with the high price tag, at a higher price! By renting a bit longer, it can be one's hope that it will allow more time for the housing market to open up.