To rent or buy a home? One of the toughest questions for a young person today. Don't worry, we think we can help with this easy guide.
To buy a home has always been seen as an obvious step on the adulthood ladder.
Owning a home can be seen as being financially stable, being responsible, and having independence. But is buying truly better than renting?
I bought and sold two homes in the past three years, and now I am back to renting.
Other than the length of ownership, my experience as a homeowner has been similar to that of my peers.
Now, as a renter, I am once again asking myself the age-old question: to buy or not to buy?
How Many Millenials Own Homes?
According to Apartment List, 47.9% of Millenials owned homes in 2020. This is more than 20% less than Generation X and 30% less than Boomers.
However, the same report states that at the age of 25, only 30% of people of all three generations owned homes.
This shows that typically, people are more likely to buy homes as they get older, but there are other factors to consider.
When Boomers were buying homes, it was a lot easier financially. However, more has changed in the world than just the economy.
Reasons to Rent a Home
Buying a home requires various types of stability, not just financial.
Renting gives you flexibility that can be positive or negative depending on your lifestyle. I sold both of my homes because I wanted to relocate.
Even with strict leases, renting can make it a lot easier to move around if you aren’t sold on a particular location or if you enjoy a regular change of environment like I do.
Although the monthly cost of a rental isn’t necessarily cheaper than a mortgage, there are no hidden home repair costs.
If your pipes burst, you can call your landlord, and they will deal with it. Another perk is that many rentals come furnished, which saves you even more money. Plus, some rentals include utilities and even Wi-Fi.
As I’ve discovered with my current home, sometimes a rental apartment comes with a built-in community. Apartments for rent in Chattanooga is the perfect example of these rental houses that offer a healthy environment.
In my case, this is a huge win because it opens a world of monthly pot luck dinners, drum circles, and great people to be social with.
Of course, the downside is less privacy, and if they’re not your kind of people, you may be in for a terrible experience.
Reasons to Buy a Home
Owning a home can be pricey, but in many places, mortgages are significantly cheaper than rent.
For example, I was paying as much for a five-bedroom house as my friend paid to rent a one-bedroom apartment. This isn’t always true and depends largely on location.
Down Payments are another financial burden, although depending on your loan, financial situation, and location, they can be waived or be as much as a rental deposit.
The biggest hidden cost of buying a home comes after you get the keys. Even in a new home, things will inevitably break, and the repair costs will pile up.
A huge perk of owning a home is that you have full reign over decorating, home improvement projects, and you can enjoy other freedoms.
As a homeowner, you don’t need to worry that a landlord won’t allow pets or that you’ll be kicked out for playing your music too loud. At the same time, you might have neighbours who give you trouble every step of the way.
Finally, it is essential to consider the nature of the real estate market. If you are in a desirable location and the economy is doing well, selling your home may be easy and profitable, even if you do it soon after purchase.
Similarly, there is no guarantee that you will make money when and if you decide to sell, and once again, there are hidden fees and taxes involved.
Despite all the fees, when you pay for a home, you put your money towards something. This is a big draw for people who see a mortgage as an investment.
My mindset was similar; even if we didn’t make money selling the home, we weren’t losing money because we would have paid a landlord.
Unfortunately, there are situations where you may end up losing the home and your investment.
If you take on owning a home, it is a good idea to have a big savings account and to be prepared for anything.
The Pros & Cons of Home Ownership
Personally, I don’t think there is a right or wrong answer to the question ‘should I buy a home or is it better to rent?’ It all depends on your individual circumstance.
The Pros of Renting
- Can be cheaper than buying
- Not a huge financial commitment
- Landlord is responsible for fixing things
- Potential built-in community
- You can move at a shorter notice
- Job search and love interests don’t have to be limited by location
- You can test a new place without committing long-term
The Cons of Renting
- Can be more expensive than buying
- May have strict rules such as no pets
- The landlord can make you move out at short notice
- You are limited to what you can do to the structure and maybe even furniture
- The money you pay isn’t going towards an investment
- Rental scams are rare but they happen
- Potentially less privacy
- Neighbours may change frequently and you might not get along with all of them
The Pros of Buying a Home
- Can be cheaper than renting
- Potentially an amazing investment
- You can rent it out if you move if you don’t want to sell it
- Enjoy the freedom to make structural changes, have pets,
- You can fix things your way
The Cons of Buying a Home
- The real estate market is unpredictable
- Selling a home can be difficult, sometimes impossible
- It can be expensive
- There are many hidden costs
- You are responsible for all the costs and problem solving
- Hard to move on a short notice
- You are stuck in one location for a long time
- If you have problems with neighbours, it can cause a long-term headache
- Not everyone can buy a home due to various factors
It can be tough to figure out if you should buy a home or opt to rent. It honestly depends on your financial situation, your goals for the future, how sure you are of where you want to live, whether or not you want to take on the responsibility, and countless other factors.
It is more common than ever not to aspire to buy a home, and it’s totally okay if it’s not for you.
If you do decide to buy a home, which I will probably do again in the future, do your research and make the best choice for you.
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