Owning a home has traditionally been seen as the pinnacle of adulthood and the realisation of the American Dream. However, an increasing number of Americans are choosing to rent instead of getting a 30-year mortgage.
Not everyone wants to be a homeowner, and many who do are choosing to forge their own paths in favour of the flexibility, financial independence, and benefits that renting offers. You may conclude that they have the right idea after looking at the numbers.
Everyone is aware that acquiring a property is a successful strategy for increasing one’s net worth, but this is by no means the only one. As in the case of the millions of homeowners who lost their houses in 2008, some homeowners may even experience financial loss. Some analysts contend that while many homes gain value over time, so do other assets like stock market investments or a small business.
According to some analysts, stock market investments can boost a person’s net worth even more than home equity.
New homeowners may be unprepared for the numerous additional costs that come with homeownership. The annual cost of homeowner’s insurance, which safeguards property from harm brought on by, for instance, fire or vandalism, can range from $538 (the average cost in Idaho) to $2,084 (the average cost in Florida). According to the Insurance Information Institute, the national average cost of homeowner’s insurance in 2012 was estimated to be $1,034.
Property taxes are another annual expense for homeowners, and according to data from the Tax Foundation, the typical cost of property taxes nationwide in 2010 was $2,043 per year. Although they may own a home, homeowners are also responsible for expenses that renters are not.
You enjoy your current living situation, and although you do pay rent, it is considerably less than market rate. This might be the case if your landlord doesn’t know (or doesn’t care) that she could charge much higher rentals, your home is rent-controlled, you share the rent with roommates, or you’ve worked out a deal with your landlord to take care of upkeep in exchange for a substantial rent discount.
You are paying far less rent than you would need to pay for a property you would want to buy since you are living somewhere you wouldn’t want to buy and stay in for the long term. This enables you to start saving now for a future house purchase.
You don’t currently have any intentions to move, but you choose the adaptability of renting over the conceivable future financial advantages of home ownership. One of the main benefits of renting is independence, as Schuyler Lemler explains further here: “If someone is a wise renter, they can take advantage of unexpected possibilities since they stayed flexible.”
You’re not prepared to invest the time and work necessary to purchase and/or maintain a home. This includes submitting an application for a mortgage and receiving approval, looking for (and locating) the ideal home, submitting an offer (and potentially engaging in a bidding war), moving in, making any repairs and/or improvements you’ll want or need to make, purchasing furniture and other items to furnish your new home, etc.
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