Is it really better to rent than to own a home right now?
There have been reports recently that it is better to rent than to buy your home. Before you make any decisions, it’s important to understand the facts behind these claims. One report claims that renting is a better financial option than buying a home because you can invest your money elsewhere. This assumes that renters will take the money they would have spent on home purchase costs and put it into an investment portfolio.
But the truth is that most renters aren’t investing in those properties. Ken Johnson, co-author of the BH&J National Price-to-Rent Index explains:
“One of the problems with the rent-and-reinvest model is the large number of people. . . Rent and spend the difference. . . . This is wealth destruction.”
The wealth you create through homeownership is why it is one of your best investments. The graph below shows the significant difference in net worth between average homeowners and average renters.
Consider the potential to build wealth through homeownership before renewing your rental agreement.
Bottom Line: If you are unsure whether you should continue renting or buy a home, a real estate advisor can help you make the right decision.
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