If the fact that mortgage rates are still insanely low – dropping again last week – and new loans can make down payments as low as three percent and give you a 5% grant to pay for it for first-time homebuyers (you may just be one) still aren’t enough to get you into the real estate market, here’s perhaps the most compelling reason of all to buy a house: rents are ridiculous and only getting more so everyday.
A recent article from Yahoo shows that “American renters spend an average of about 30% of their monthly incomes on rent… but throughout the country, many people spend much more than that. That’s a decent indication of a rent affordability problem in the U.S., given that housing experts consider consumers to be ‘rent-burdened’ if they pay more than 30% of their income for housing.”
This comes on the heels of other reports that show that, “On average, it’s 35% cheaper to buy than to rent, up from 33% last year. In some areas, particularly in the south, it’s over 50% cheaper to buy.”
But back to that sobering Yahoo stuff. “Housing researchers project that renters will grow at a faster rate than homeowners throughout the next decade, so even if wages and rent prices grow at the same pace, millions more Americans will be rent-burdened by 2025,” they said. “In a new report, Urban Institute researchers estimate there will be 6.5 million new renters by 2025. If rent and incomes each grew 2% annually over this time period (as the Harvard research assumes), Urban Institute estimates there will be 2.2 million more rent-burdened consumers.”
Their data “estimates 31% of renters will be severely rent-burdened by 2025, up from 28% in 2015 – that’s an additional 4 million people putting more than 30% of their incomes toward rent. Many personal finance experts recommend you spend no more than 25% of your income on rent, but if demand continues to rise faster than wages, that will be increasingly difficult.”
If you’re currently renting, and especially if you’ve been doing so for a long time, and super especially if you really, really want to stop renting and buy something, you can probably already rattle off a few dozen reasons why it stinks to rent. But in case you need a refresher, or just want to add more fodder to your list, we’ve got a few reasons of our own:
- Every time your rent rises, it impacts your ability to save, pushing homeownership further and further away.
- Pride of ownership – it’s a real thing.
- Who writes checks anymore, anyway?
- Your rent is making someone else rich. Bloomberg reports that you can profit by hundreds of dollars per month by renting your home depending on where it’s located. That’s great if you’re the owner. Not so much if you’re the one padding the owner’s bank account.
- You have to live with finishes that don’t meet your expectations.
- You’re not building any equity by paying rent. If the rental rises in value, you won’t be the one to benefit. And, in fact, you’ll probably end up paying more for the privilege of living there.
- Your house payment can’t go up like your rent can.
- You’re at the mercy of your landlord, who can (and will!) decide when you should pay more.
- You need permission to change the paint colors.
- You can’t make changes to a crappy floor plan.
- No place to put stuff. If you’re in an apartment, the storage situation is probably bleak.
- But not as bleak as having to share laundry facilities with your neighbors
- Mail that never seems to end up in your slot
- You have to live with the galloping dog above you.
- Or the galloping kids beside you.
- Or the thump-thump-thump of the rap music aficionado downstairs.
- No tax write-off and nothing to show for your money.
- Parking Is Horrible. If your options don’t include reserved parking and spots on the street are limited, you know just how bad it can be. But did you know that parking actually makes apartments more expensive?
- Having to wait – and wait and wait – for repairs to be done.
- No pets! If you find a rental that allows your dog, you can count on paying a substantial deposit. And certain kinds of dogs may not be allowed regardless of how much you’re willing to pay.