Many potential first-time homebuyers don’t realize it, but it can be much cheaper to buy a home than continue renting.
According to Keeping Current Matters, now more than ever, it is much cheaper to buy a home than to rent. The percentage of income needed to afford a median home is 15.3%, while the percentage of income needed to afford a median rent is 30.1%.
The reason for this disparity—especially in our Portland market—is that rents are at an all-time high. Although it’s expensive to buy as well, interest rates are still at historic lows, so if you can get a down payment together, you’ll still be buying at an extremely low rate. You’ll also have an equity position. When you think about it, if you’re going to pay a mortgage, you might as well pay yours—not your landlord’s.
There are many other statistics that justify buying a home instead of renting. The historical average of home appreciation is 4%, so if you stay in your home for a period of—say—10 years, you’ll add considerable value to it. Even if no appreciation happens after 10 years and you haven’t added any value, you were still able to live rent-free for 10 years.
Homeownership comes with certain tax benefits as well. For example, you can write off all of that mortgage interest that you’ve paid every year for 10 years. Be sure to talk to a financial professional as well as a CPA for more information on these kinds of benefits.
Obviously, I’m biased when it comes to this decision, but it behooves you to look at what our market has done over the last 10 years in terms of appreciation when deciding whether to buy or rent. Buying certainly beats taking $800, $1000, or even $1,200 every month and lighting a match to it.
If you have any questions or are interested in making the leap to homeownership, don’t hesitate to reach out to me. I’d be happy to help you.