Buying a Home May Make More Financial Sense Than Renting One

Buying a Home May Make More Financial Sense Than Renting One

  • Keeping Current Matters
  • 08/25/22

To Rent or To Buy?

We all know home prices have risen in recent years. With the lack of student housing in Santa Barbara and the shortage of homes for sale, the price of rentals has skyrocketed as well. Which means rising prices will likely impact your housing plans either way. 

However, there are a few key differences that could make buying a home a more worthwhile option for you.

 

Need More Space? 

What you may not realize is that, according to the latest data from realtor.com and the National Association of Realtors (NAR), it may actually be more affordable to buy than rent depending on how many bedrooms you need. The graph below uses the median rental payment and median mortgage payment across the country to show why.

 

As the graph conveys, if you need two or more bedrooms, it may actually be  more affordable to buy a home even if prices rise. While this doesn’t take into consideration the interest deduction or other financial advantages that come with owning a home, it does help paint the picture that it may be more affordable to buy then rent for that unit size based on nationwide averages. So, if one of the factors motivating you to move is a desire for more space, this could be the added encouragement you need to consider homeownership.

A recent article from realtor.com says:

“The median rent across the 50 largest US metropolitan areas reached $1,876 in June, a new record level for Realtor.com data for the 16th consecutive month.”

Looking for Stability and a Chance to Grow Your Wealth?

​​When you buy a home, you lock in your monthly payment with a fixed-rate 

Mortgage (even if it’s an ARM, it’s fixed for a certain period of time). And that’s especially important in today’s inflationary economy. With inflation, prices rise across the board for things like gas, groceries, and more. Locking in your housing payment, which is likely your largest monthly expense, can provide greater long-term stability and help shield you from those rising expenses moving forward. Renting doesn’t provide that same predictability. Not to mention, when you buy, you have the chance to build equity, which in turn grows your net worth. It works like this. As you pay down your home loan over time and as home values continue to appreciate, so does your equity. And that equity can make it easier to fuel a move into a future home if you decide you need a bigger home later on.

A recent article from CNET explains it like this:

“…if you buy a house and secure a fixed-rate mortgage, that means that no matter how much prices or interest rates go up, your fixed payment will stay the same every month. That’s an advantage over renting since there’s a good chance your landlord will raise your rent to counter inflationary pressures.” 

 

 

 

Work With Us

Work With Us

We’ve been representing buyers and sellers in Santa Barbara County for over twenty years and we’re the top-producing independently owned real estate company in the area. Our devoted team of agents offers individualized attention, personalized service, and tailor-made marketing.

Follow Us On Instagram

Locally owned and globally connected, Village Properties is Santa Barbara's leading independent real estate firm with over 180 dedicated & driven agents.