High demand and short supply in the rental market have driven rates up nationwide. Shaun Donovan, Secretary of Housing & Urban Development, says “We are in the midst of the worst rental affordability crisis that this country has known.”
The projected surge in rental housing construction and available units probably won’t be enough to drive the rental market in 2014. Rental affordability has been hit by lagging income growth and a lean job market.
Slow income and job growth have also affected the housing recovery. Homeownership rates will slow and normalize as mortgage rates are predicted to reach 5% by the year’s end and home prices are expected to increase by 3%.
The question of whether to buy or rent this year is not an easy one to answer. However, keep in mind that homeownership comes with major financial rewards you’ll miss if you rent.
Factor in these 5 financial reasons for taking the leap into homeownership:
- Increased Net Worth: Homeowners are worth 30x’s more than renters.
- Investment Benefits: You are paying for housing whether you buy or rent. Invest your dollars in something you own rather than paying a landlord.
- Home Equity: Equity in your home can help pay for college, retirement, and major life events.
- Tax Benefits: Homeowners can deduct mortgage interest and property taxes from their income.
- Savvy Financial Habits: Owning a home means more financial responsibility and encourages better saving and spending habits.
Local real estate markets, your financial status, and personal needs and goals will all affect your housing decision. Consult a financial advisor and your local real estate professionals to help guide you to happy and healthy living in 2014.
Are you currently renting?
What’s holding you back from homeownership?