Rent is costing more these days. We are not talking about just the monthly payment being more expensive than in the past, but people are having to skimp in other areas just to write out that rent check each month. The price they are paying isn’t just hurting their bank account. It’s hurting things such as healthcare, grocery budgets, and retirement.
While rent keeps rising, owning a home with a monthly mortgage payment continues to be easier on the pocketbook…with an end result of one day owning your home! Zillow reported that renters can expect to pay anywhere from 30-40% of their income on rent. Alternatively, on average, mortgage payments will only take up about 15% of your income. Even if mortgage rates climbed back up to 6%, most people will still not spend more than 30% of their income. “There are good reasons to rent temporarily — when you move to a new city, for example — but from an affordability perspective, rents are crazy right now,” says Zillow’s Chief Economist, Dr. Svenja Gudell. “If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage.”
With rents being so high, the money is having to come from somewhere. Studies show that people are having to dip into their emergency funds and even skipping out on some health check-ups to be able to make ends meet. A lot of young adults are not participating in or even giving thought to retirement plans. Unfortunately, planning for the future is just not a priority when you are needing to pay for a roof over your head.
Sadly, these findings are not localized to only a few markets. Cities across the nation are experiencing the same problem. Luckily, the Denver area is only showing that the average amount paid for rent is about 34% of income currently. That is always subject to change, however. With rent appreciation rising at a much faster rate than house appreciation these days, it is likely to change in a way that will negatively impact renters.
While on this topic, it has to be said that a lower monthly payment (with an intent to one day own your home outright) is not the only pro on the “Why to buy instead of rent list.” There are many more positive aspects to buying a home.
If you are a renter, don’t let this get you down. There is a silver lining. It is possible to get out of paying rent and own your own home. Don’t be a regretful renter any longer. We will walk you through every step of becoming a happy home owner. We can’t wait to hear from you!