Should You Rent or Own Right Now?

You may have seen reports in the news recently saying it’s better to rent right now than it is to own your home. Before you let that impact your decisions, you should understand what these claims are based on.

Many times, reports like these assume things that aren’t realistic for the average household. For example, the methodology behind one of those reports says that renting is the smarter financial option because of the opportunity to invest money elsewhere. It assumes renters take the money they’d spend on costs tied to buying a home and put it in an investment portfolio.

But here’s the thing – most people who rent aren’t making those investments. Ken Johnson, Co-Author of the BH&J National Price-to-Rent Index, explains:

“One of the difficulties with the rent and reinvest model is many people . . . simply rent and spend the difference. . . . That’s wealth destroying.”

The reason homeownership is one of the best investments you can make is the wealth it helps you build. That’s why there’s a significant difference between the net worth of the average homeowner and the average renter (see graph below):

It would be prudent to consider the opportunity to build wealth that homeownership provides before renewing your rental agreement.

Bottom Line

If you’re unsure whether to continue renting or to buy a home, connect with the Just Say Home KC Team at 816-656-2816. As experts in the Kansas City housing market, we can give you the information you need to make the best decision for you.

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