Is It Still Worth Buying Rather Than Renting Your Place?
When most people think of homeownership, they consider it the ideal to strive towards. They assume that renting is for people who cannot afford to own a home, but property is an investment you should make as soon as you can. However, the reality is no longer so simple.
A few decades ago, homeownership was a far more accessible achievement. Even those who were working jobs with relatively low wages could buy a small home. In this environment, renting was far from ideal. After all, you'd be paying money into a void rather than using your income to eventually own an asset.
Today, with the value of homes increasing every year while average wages stagnate, it is difficult for working and middle class people to afford the expenses of buying a home. Is it still worth saving towards putting down a deposit and paying transfer costs rather than simply renting?
Here are some of the considerations to take into account.
Is homeownership a realistic goal?
Before discussing whether homeownership is still ideal, you should take an honest accounting of your financial realities. Create a budget, noting the income that you receive every month as well as the standard expenses. Include variable expenses that are likely to recur in some form or other and are unavoidable.
Now you can assess whether it is realistic to start saving towards buying a home. It is possible that you'll find you can save enough money on a monthly basis – but that using that money on a home would leave you with no savings.
If you find that you would be able to start saving again once you were paying a mortgage, homeownership is still a viable option. If not, it is worth rethinking your priorities.
Do you want to stay put?
The different financial realities we face today make homeownership challenging. But there are other reasons not to buy a home. One of the considerations is whether you really want to stay put for the foreseeable future.
We live in a very different world today which is more globalized than ever before. Even with the restrictions the pandemic placed on us with regards to traveling the world, we connect in a much more international sense. Businesses are finding it increasingly easy to function internationally, especially with the remote working environment the pandemic forced.
You may still want to live in other countries before settling down. In this case, buying a home is not ideal. You make it far more difficult to pack up and leave, both because you have a mortgage to pay and because you'll be spending a lot of your disposable income on decorating and maintaining your home.
Are there protections for renters?
Another reason renting is a more viable option for many people today is because there are protections available that will prevent unforeseen circumstances from leaving you in the lurch. Renters insurance is one of the most accessible protections renters can arrange for themselves.
Renters insurance covers your possessions while you are renting someone else’s property. Click here to find out what is covered. You can pay as little as $5 a month for your renters insurance premium and include factors like personal liability, which protect you if you cause accidental damage to your landlord (or anyone else).
There are still no guarantees that you won’t get a petty landlord who will try to evict you for no good reason, but post-COVID there are more regulations in place to prevent them from succeeding. Not all of these regulations are going to last forever, but some permanent changes are possible.
Is property a good investment?
Finally, you need to ask yourself whether owning the property you live on is a good investment choice for you. While property in general is a good investment, you won’t benefit from it in this way unless you are making income off it. When living on the property, you're going to be spending money on it and the investment will only pay off if you decide to sell in a good sellers market in the future or find somewhere else to live while you rent it out.
Buying property is no longer the obvious choice. Renting can be ideal for many people in 2021, and you should consider whether you really need to own your house.
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