Forced Savings Account–Buy or Rent?

To Purchase or Rent?

Is there a way to turn your monthly expenses into a growing investment?  With the ever-so-strong investment in real estate, there is a chance you can make this possible.  According to the National Association of Realtors (NAR), the average homeowner’s net worth is 40 times that of a renter.  Lawrence Yun from the National Association of Realtors commented when looking at a data study about home appreciation and wealth and he said, “This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” he added, “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”

If you are currently renting you are most likely paying someone else’s mortgage, creating their wealth, but getting zero in return for your financial future.  Owning is not just putting a roof over your head, there is much more to it. Owning a home plain and simple helps put equity in your pocket. In fact, according to the US Census Bureau, about two-thirds of a person’s net worth comes from home equity!  Plus, home values are continuing to appreciate.  The Federal Housing Finance Agency announced that home prices increased 6.6% in 2023 and the Case-Shiller Home Price Index recently reported that home prices rose 5.5% last year.  Case Shiller also explained that national home values grew 46% higher since 2019 which is certainly a very high return.  House prices are forecasted to continue to rise in 2024 due to the current dynamic of the market which has high levels of demand and tight levels of supply or housing inventory.  Of course, every scenario is different, but if you are currently renting, switching your mindset to owning could very well be your best option and should be taken into consideration.