Renting vs. Buying: The Net Worth Gap You Need To See
Trying to decide between renting or buying a home? One key factor that could help you choose is just how much homeownership can grow your net worth. Every three years, the Federal Reserve Board shares a report called the Survey of Consumer Finances (SCF). It shows how much wealth homeowners and renters have – and the difference is significant. On average, a homeowner’s net worth is nearly 40 times higher than a renter’s. Check out the graph below to see the difference for yourself: Why Homeowner Wealth Is So High In the previous version of that report, the average homeowner’s net worth was about $255,000, while the average renter’s was just $6,300. That’s still a big gap. But in the most recent update, the spread got even bigger as homeowner wealth grew even more (see graph below): As the SCF report says: “. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.” One big reason why homeowner wealth shot up is home equity. Equity is the difference between your home’s value and what you owe on your mortgage. You gain equity by paying down your mortgage and when your home’s value goes up. Over the past few years, home prices have gone up a lot. That’s because there weren’t enough available homes for all the people who wanted one. This supply-demand imbalance pushed home prices up – and that translated into faster equity gains and even more net worth for homeowners. If you’re still torn between whether to rent or buy, here’s what you should know. While inventory has grown this year, in most places, there’s still not enough to go around. That’s why expert forecasts show prices are expected to go up again next year nationally. It’ll just be at a more moderate pace. While that’s not the sky-high appreciation we saw during the pandemic, it still means potential equity gains for you if you buy now. As Ksenia Potapov, Economist at First American, explains: “Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.” But prices and inventory are going to vary by area. So, lean on a local real estate agent. They’ll be able to give you the local trends and speak to the other financial and lifestyle benefits that come with owning a home. That crucial information will help you decide the best move for you right now. As Bankrate explains: “Deciding between renting and buying a home isn’t just about cost — the decision also involves long-term financial strategies and personal circumstances. If you’re on the fence about which is right for you, it may be helpful to speak with a local real estate agent who knows your market well. An experienced agent can help you weigh your options and make a more informed decision.” Bottom Line If you’re not sure if you should rent or buy, keep in mind that if you can make the numbers work, owning a home can really grow your wealth over time. And if homeownership feels out of reach, connect with a local real estate agent and lender. They can help you explore programs that may make buying possible.
Essential Tips for First-Time Renters
Navigating the rental market for the first time can be both exciting and overwhelming. As a first-time renter, it's crucial to be well-prepared to make informed decisions. This guide provides essential tips on budgeting, understanding lease agreements, avoiding scams, and finding your ideal rental home.**Budgeting**One of the first steps in your rental journey is setting a realistic budget. Calculate your monthly income and expenses to determine how much you can afford to spend on rent. A common rule of thumb is that your rent should not exceed 30% of your gross monthly income. Don't forget to factor in additional costs such as utilities, internet, renter's insurance, and potential maintenance fees. Having a clear budget will help narrow down your options and prevent financial strain.**Lease Agreements**Understanding the lease agreement is critical before signing on the dotted line. A lease is a legally binding contract that outlines the terms and conditions of your rental arrangement. Carefully review all clauses, including the duration of the lease, rent amount, payment due dates, security deposit details, and any rules regarding pets or subletting. If there's anything you don't understand or agree with, don't hesitate to ask for clarification or negotiate terms with the landlord.**Avoiding Scams**Unfortunately, rental scams are prevalent in today's market. To protect yourself from fraudulent listings and dishonest landlords, follow these precautions:1. **Verify Listings:** Use reputable websites and cross-check listings on multiple platforms to ensure they are legitimate.2. **Visit Properties:** Always visit the property in person before making any payments or signing agreements.3. **Beware of Upfront Payments:** Be cautious if a landlord requests large sums of money upfront before you've seen the property or signed a lease.4. **Research Landlords:** Look up reviews and ratings for landlords or property management companies.5. **Trust Your Instincts:** If something feels off or too good to be true, it probably is.**Finding a Rental Home**Finding the perfect rental home involves more than just browsing listings online. Here are some practical steps to help you in your search:1. **Determine Your Needs:** Make a list of must-have features such as location, number of bedrooms, amenities, and proximity to work or school.2. **Set Priorities:** Decide what aspects are non-negotiable and where you can be flexible.3. **Use Multiple Resources:** Utilize online platforms, local real estate agents, social media groups, and community boards.4. **Inspect Properties Thoroughly:** During viewings, check for signs of damage or maintenance issues and ask questions about utilities and neighborhood safety.5. **Act Quickly:** The rental market can be competitive; if you find a suitable property that meets your criteria and budget, be prepared to act fast.**Final Thoughts**Renting your first home is an important milestone that comes with its own set of challenges and rewards. By budgeting wisely, thoroughly understanding lease agreements, staying vigilant against scams, and conducting diligent searches for rental properties, you'll be well-equipped to find a place that feels like home.Remember that renting is not just about securing a roof over your head; it's about finding a space where you feel comfortable and safe while managing your finances responsibly. With these essential tips in mind, you're ready to embark on this exciting new chapter with confidence!
5 Essential Tips Every Realtor Should Know for Success
Being a successful realtor involves more than just showing properties. It’s about understanding the market, building relationships, and continuously improving your skills. Whether you're a seasoned pro or new to the industry, these five tips will help you thrive in real estate: 1. Master the Local Market Knowing your market inside and out is key. Stay informed about neighborhood trends, pricing, and what buyers and sellers are looking for. This knowledge will allow you to provide valuable insights and position yourself as a trusted expert. 2. Build Strong Client Relationships Real estate is a people business. Building trust with clients through open communication, honesty, and attentive service is crucial. Satisfied clients often lead to referrals, which can help grow your business over time. 3. Leverage Technology and Social Media Today’s real estate industry relies heavily on technology. Utilize social media, real estate platforms, and digital marketing tools to promote listings and connect with clients. A strong online presence can help you reach a wider audience and close deals faster. 4. Develop Strong Negotiation Skills Negotiation is at the heart of real estate transactions. Whether you're representing buyers or sellers, being a skilled negotiator ensures that you secure the best deal for your clients. Stay calm under pressure and be prepared to find creative solutions. 5. Stay Educated and Adaptable The real estate market is always evolving. Stay ahead by continually learning—whether it’s through new laws, emerging trends, or technology updates. Adaptability is key to remaining competitive in this dynamic field. By mastering these tips, you can elevate your real estate career, build long-term client relationships, and stay competitive in the ever-changing market!
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