You may have seen reports in the news recently saying it’s better to rent right now than to own your home. But before you let that impact your decisions, you should understand what these claims are based on.
A lot of the time, these reports assume things that aren’t realistic for the average household. For example, the methodology behind one of those reports says that renting is the smarter financial option because of the opportunity to invest money elsewhere. It assumes renters take the money they’d spend on costs tied to buying a home and put it in an investment portfolio.
But here’s the thing – most renters aren’t making those investments. Ken Johnson, Co-Author of the BH&J National Price-to-Rent Index, explains:
“One of the difficulties with the rent and reinvest model is many people . . . simply rent and spend the difference. . . . That’s wealth destroying.”
Homeownership is one of the best investments you can make because of the wealth it helps you build. That’s why there’s a significant difference between the net worth of the average homeowner and the average renter (see graph below):
So, before you renew your rental agreement, consider the opportunity to build wealth homeownership provides.
Bottom Line
If you’re unsure whether to continue renting or to buy a home, let’s connect to help you make the best decision.
