One of the biggest questions when it comes to homes is, “Which is better, renting or owning a home?” This is an especially heavier decision for first-time homebuyers, some of whom might feel that purchasing a home is a daunting task. Fortunately, we are here to show you 3 key points why the investment of purchasing your own home is better than renting one out.
Buying a Home is a Better Long-term Investment
One of the biggest advantages of buying a home is the potential for long-term financial growth. Over time, real estate values typically appreciate, meaning that your property could be worth more than what you initially paid for it. This increase in property value can offer a significant return on investment. As seen in the graph below, the value of a home only increases over-time. This makes it one of the most worthwhile financial investments possible, and this is without considering all the other benefits it can provide.
Dataobtained from: https://www.census.gov/
As seen in the graph, even during the market crash of 2008, houses were still a valuable investment. Even if the real estate industry experiences a market crash, it is still expected to bounce back and reach even higher values. Unlike renting, where payments don’t contribute to ownership, buying a home ensures that your money is working for you and not someone else. One of the benefits of homeownership is that as you pay down your mortgage, you build equity in your home, contributing to your net worth. One more financial benefit of homeownership is that homeowners can often deduct mortgage interest and property taxes from their taxable income, which can result in significant savings each year. These deductions help reduce the overall cost of owning a home and make homeownership more affordable, especially in the early years of a mortgage.
Renting is better as a short-term expenditure, but it does not serve as a viable long-term option. While the housing market may experience short-term fluctuations, the long-term trend tends to favor property value appreciation.
Renting a Home is Subject to an Unpredictable Market
Renting exposes you to the volatility of the rental market. The one in command of your finances aren’t you, but your landlord. Landlords can ask you to vacate your home if your lease term expires, increase rent prices unexpectedly, and your lease could be subject to renewal terms that may be unfavorable for you. Rent increases may outpace inflation, forcing renters to pay more for the same space, which can be challenging in high-demand areas. As you can see in the graph below, rent is not a financial responsibility that remains stagnant. The trendline suggests that rent prices will just keep increasing as the years go by. The steeper increase in recent years also shows that the prices of rent may have significant increases in the future as well.
Dataobtained from: https://www.census.gov/
Renters also have to face the uncertainty of having to move if a landlord decides to sell the property or terminate the lease. Unlike homeowners, renters don’t have control over these external factors, which can cause financial instability in the short term. As shown in the previous point as well, as a renter, you keep paying to live in a property but you are not improving your financial situation. Owning your home helps build equity as you keep paying, thus improving your long-term finances. Renting, on the other hand, only lines up the pockets of your landlords, and does not improve your future at all.
Buying a Home gives you your Own Private Sanctuary
Homeownership provides a level of privacy and stability that renting simply cannot offer. When you own your home, you are not subject to the whims of landlords, such as rent increases, lease terminations, or unexpected eviction notices. More importantly, you have full control over your living space. You can make renovations, personalize your property, and establish long-term plans. This privilege is because you know that you won’t be forced to move because the lease is not controlled by someone else. For many people, this sense of permanence and control is invaluable. Additionally, owning a home protects you from the uncertainty of rising rents, giving you predictable housing costs in the long run.
In conclusion, while renting may offer flexibility in the short term, buying a home provides numerous long-term benefits, making it a more worthwhile investment. From building equity and wealth over time to offering stability and control over your living space, homeownership is a smart financial decision for those looking to secure their future. Despite market fluctuations, the value of real estate tends to appreciate, and with it, so does your financial stability. Purchasing a home is not just about having a place to live, it’s an opportunity to invest in your future and create lasting financial security.
Dulcie Crawford is a native Nevadan, born and raised in Las Vegas. Dulcie is a Community Expert & stays current with updates on market trends & market conditions. A senior Realtor with Signature Real Estate Group, she has sold over 1,300 homes since 1998. You are assured an exceptional experience when buying or selling Real Estate with The Dulcie Crawford Group.
