As the economy has shifted in recent years, many people have shifted towards renting a home or apartment instead of buying their own place to live. This rings especially true with younger generations. One of the main reasons behind this is the massive amount of money it costs to buy a home. Typically, one needs to have a sizeable down payment and then take out a mortgage to cover the rest of the costs. This is something that really isn’t feasible for young people who are just entering the workforce. They typically earn an entry-level salary and may even be swamped by student debt and poor credit already. These people are living paycheck to paycheck and as such don’t have the funds to buy a house or even really save up to buy a house. Therefore, some people push the idea of purchasing their own home out of their minds entirely and instead opt to simply pay an extra monthly bill in the form of rent. Does this mean the American Dream of owning a house and raising your family in it is dead? Are people better off renting their homes in the long term, or is owning real estate still the goal?
Renting
In the past, renting was the penultimate step of adulthood. After graduating high school or college people would rent an apartment or location in order to get their feet underneath them, Renting was seen as a steppingstone to owning a house, not the end goal. However, as housing prices have risen over the years, people have little to no option but to rent for a considerable amount of time. Instead of renting and saving up to purchase their own home, people are opting to just permanently rent their place. There are several advantages to this. First, you can save a lot of money in the short term. You won’t have to worry about saving an absurd amount of money in order to afford a down payment, and you won’t have to worry about large mortgages eating into your income. However, there are some drawbacks to permanently renting. For example, there is less security in renting, as the person who you are renting from could evict you or refuse to renew your rent if it is up. In addition, rent prices could exceed the costs of owning a home over time. Rent prices are on the rise, coinciding with the increase in demand and a new trend of renting over owning. Finally, there is a mental aspect of owning your own home. There is just something so satisfying and accomplishing about purchasing your own home and raising a family in it. Thankfully there is a way to combine both methods by using the rent-to-own option. Rent to own consists of agreeing to acquire a home for a certain price after a set period renting it. For example, if you have a condo rent to own then you can purchase it for a certain price after you rent it for a number of years. This can be a great way to combine both ownership methods.
Owning
Owning a home was long thought of as the goal in real estate. However, as market forces have changed throughout the year, owning a home has become sort of demonized as an unattainable goal. However, is owning a home really that impossible? Unfortunately, for some people, it might be at first. But with the right plans and savings, you could own your own home. For example, one plan for owning a home could be the rent-to-own strategy. Alternatively, you could simply save a portion of your monthly income and put it toward a fund for a down payment. After a while, you should be able to save up enough money for your down payment without making too many sacrifices to your everyday life. There are also a lot of advantages to owning a home. For example, you have some stability and never have to worry about being evicted or having your rent not be renewed. In addition, once you pay your mortgage off you will not have any payment related to your home and owning could be cheaper in the long run when factoring in rising rent prices. However, owning a home is a huge financial commitment, and could lock you down into one area with limited flexibility. Saving for your down payment also might be challenging for certain individuals that have bad spending habits. However, if done properly it can save you money in the long run.
