The classic buy vs. rent debate has been going on for ages. Is buying a home really a valuable investment, or are you better off renting and putting your money into other wealth-building avenues? While arguments can be made for both, and you should certainly never put all your eggs in one basket, the numbers speak for themselves when it comes to the financial benefits of owning a home. Let’s take a closer look at what they have to say.
Home values are going up, up, up. Between Q3 2016 and Q3 2017, U.S. house prices rose 6.5%, according to the Federal Housing Finance Agency’s (FHFA) House Price Index (HPI). On a home valued at $250,000, that’s a $16,250 bump in equity in one year alone! Adjusted for about 2% inflation, that number comes in around $11,000. Not too shabby!
Big cities are booming. It’s no secret that home values are rising faster in big cities, but just how fast? Of the 100 largest metro areas, the following saw the highest price increases from Q3 2016 to Q3 2017: Seattle-Tacoma, WA (13.8%), Stockton, CA (12%), Boise City, ID (11.2%), San Francisco, CA (11.2%), and Grand Rapids, MI (11%).
Income growth can’t keep up. Collectively, national house prices have risen about 34.6% over the last five years, which far outpaces inflation. On the flip side, the median household income has only risen about 10% from 2011-2016, according to the latest data. So what you may be lacking in higher wages, you could be making up in equity.
These numbers clearly illustrate that it pays to be a homeowner. Experts agree that these trends are likely to continue, making the case for homeownership even stronger.
Breaking It Down
If you already own a home, you can rest easy knowing you are increasing your net worth by building equity. But if you’re still renting — and some people have legitimate reasons to do so — you’re missing out on some awesome wealth-building opportunities. And the longer you wait, the more expensive it will be to start taking advantage of them. Bottom line: Make the smart decision to start building your wealth through homeownership. Either way, you’ll have a monthly payment. Why not make it work for you?
Article originally posted by Busey Home Mortgage