Should I rent or should I buy a house? Which is better for the long-term? Today, I’ll be reviewing three reasons why buying a house is superior to renting a house as spelled out by financial guru Dave Ramsey. However, although I am a local Realtor®, this is NOT one of those “you should buy a house” blogs. Because towards the end of this article, I’ll be looking at a few disadvantages of home ownership and why renting MIGHT be a better option for you, so be sure to read through for those.

First, rents go up just about every year. Period. I own several rentals and, because of rising taxes and insurance, maintenance, and other expenses, it COSTS me more, which I’m passing onto the tenant. Even if my costs DIDN’T go up, if I thought I could raise the rent every single year, I would.

It’s quite simple, I want my investment working harder for me every year. On the flip side, if you purchase a home, presumably financing it, you’re locking down your monthly payment. Yes, your taxes and insurance will continue to rise, but they aren’t the majority of a mortgage payment.

Secondly, the value of a house rises over time. The average price of a US home in 1965 was right around $19,400, whereas the average price of a home towards the end of 2023 was over $513,000! Historically, home prices rise at about 4 percent per year. Inflation does erode this increase, but it’s an asset that is there waiting for you, and a mortgage payment is a hedge AGAINST inflation.

It’s true that some years the value of a house goes down, but most years, the value of what YOU OWN rises. It belongs to YOU! Check out this chart from the Federal Reserve Economic Data that shows the increase in home values since 1965.

Don’t think rental prices go up at a similar rate? Think again. Plus, as those rental prices rise, the value of what you own, which is nothing, does not increase.  The difference is what I spoke of earlier: locking in the largest portion of that mortgage payment so it no longer rises.

When I built my home back in 2001, I thought my mortgage payment was high, it was like $700/month, but today, that looks like chump change! However, the value of my home, along with the equity has likely more than doubled, while my mortgage remained the same.

Because the value of a home rises over time, which is what you OWN, it is a great wealth building tool. It stabilizes the greatest expense that most of us have. Yes, this points back to what I just pointed to with my $700/month mortgage payment, but this point cannot be overstated. Most of the world’s wealthiest people have a good part of their investment in real estate. I’ll never be Warren Buffet, but I DO have control over where MY dollars go, and I’d rather keep them in MY pocket than a landlord’s.

If you’ve got real estate needs anywhere here in Florida, pick up the phone and give us a call 352.604.4331 or fill out the contact form.

Now, I said before that there are some disadvantages to home ownership, and that it ISN’T for everyone, so let’s address a few of those. First, if you aren’t certain you’ll be living in an area for more than 3-5 five years, renting may be a better option. Buying AND selling are both expensive, so it’s best to minimize the number of times that you do them. If you’re new to an area, maybe renting for a year to get to know the lay of the land, and areas that YOU like, is a good idea.

Maintenance is another reason you may opt to rent. Air conditioners break down, plumbing fails, and roofs need replacing. These are just the tip of the iceberg, and they’re expensive, and if you can’t pay for them as they occur, it could be disastrous. Plus, you have to DEAL with them. I’m not a handy person, so I rely on others for basic maintenance around my home, and sometimes it’s stressful…and expensive!

Speaking of maintenance, that lawn needs mowing, the trees need pruning, and the house needs re-painting. Maybe you just don’t want those headaches, if this is the case for you, then renting might be better than buying a house. Plus, installing a swimming pool these days can run you $30,000 to $100,000! Whereas there are often rental situations when swimming pools, and all sorts of other amenities are included in that rent.

Plus, I said earlier that a mortgage payment is held down because the largest portion of that payment is locked down, but what about the REST OF IT? The cost of taxes and insurance are always going up, and although homestead exemption here in Florida helps to minimize that, rising costs are still a reality.

There are other advantages to renting, too, but here I’m just trying to highlight the biggies. If you’ve got further questions, give us a call 352.604.4331 or fill out the contact form.

Credit: Dave Ramsey YouTube channel video

Published on March 19. 2024 / Tags: first time home buyer, Florida Home Searches, Real Estate, real estate trends, Rent vs buy, Volusia real estate market / no comments.