Today more than ever, owning beats renting
As anyone who has looked into today’s hot housing market will attest, real estate prices are up all over. Persistent supply chain challenges along with increased energy and food prices have affected many aspects of the way we live, and housing is part of the relatively sudden increase. According to a recent CNN article, new home prices and mortgage rates have risen historically — but so has rent. In fact, the median rent is up nearly 20% from just two years ago.
With housing costs offering no relief from the current economic anxiety, it might occur to you to delay your decision and stay where you are — perhaps in a home you’ve outgrown or an area you’d like to leave.
However, many of our recent customers have told us that rising rent (with no end in sight) eventually pushed them to make their move to a newly-built Domain home. After consideration, they decided their money should start working toward something more substantial — with immediate and lasting benefits that accumulate over time.
Where should your hard-earned money go?
Make payments on rent, or make payments toward a mortgage? This is an age-old question that’s only gotten more crucially important in the age of sky-high rent.
Depending on your personal situation, it’s also a question everyone might answer differently.
Are you restless? If you’re already daydreaming about your next adventure in the next city (with some world travel thrown in for good measure), maybe you’re not ready to commit to one home in one town.
Renting is like a treadmill
Perhaps renting, for you, seems like more of a noncommittal solution that will allow you to pull up anchor and move at will. Of course, it’s not always that simple.
Let’s put it this way: that apartment lease wasn’t written to benefit people who follow their latest whims. Depending on your contract, you may not be able to pull up roots whenever you want without substantial financial penalty — usually 2–3 months’ rent and/or forfeiting your security deposit.
This credit.com article offers some tips for if you’ve reached the end of your rope on an expensive apartment lease, but they don’t sugarcoat the realities of the situation. One way or another, to break contract is to pay.
Owning is like “paying it forward”
For someone who has found the area they love (like here in beautiful Florida), it might make sense to plant roots and commit to a new home purchase. When our customers chose Domain Homes to build their dream homes, they had done the math and weighed their options. Ultimately, each opted for both short- and long-term satisfaction in a well-designed home to invest the next chapter of their lives in.
Purchasing a home does, of course, require considerable financial outlay. However, it’s not hard to calculate what it would take to break away from renting once and for all.
Consider the up-front money needed to cover the initial transaction — plus the monthly mortgage payments you’d be committing to.
You will want to factor in ongoing maintenance, as well. Even in a brand-new home, expect both labor and expense from month to month to maintain structural integrity and cosmetic appeal.
On the other hand, all that mortgage loan interest is tax deductible — meaning more money back in your pocket. More importantly, the bulk of your every payment applies toward something that is, and will remain, tangibly valuable: paying down that principal loan and building equity in your home.
“What if I change my mind?”
Equity-building won’t come in very handy if, for any reason, you suddenly decide to uproot yourself and move elsewhere within a year or two.
Stay in the home for several more years, however, and you’ll start to be at more of an advantage. That’s the proverbial “five-year rule.”
According to a recent Orchard article, the average stay in a new home before moving has risen to 10 years. Before the 2009 housing crisis, it was half of that time span. With rising home prices, and the possibility of losing money on capital gains taxes or mortgage prepayment penalties, it makes sense to wait until the “breakeven point” — where you can recoup your investment.
In a market this hot with prices this high, that breakeven point may not be as distant as historically thought.
So, the question remains: plant roots or drift elsewhere? Ultimately, it’s up to you to make this decision.
Here’s how to get the ball rolling
If home ownership makes more sense in your situation, Domain Homes is here to make the entire process easier. Not only can you select from a wide variety of floorplans and styles — we also help with the mortgage and title insurance processes.
Contact us today to start putting your money towards something wonderfully stable — an investment of lasting value that will enhance your life both day and night from the moment you walk in the front door.
We look forward to talking with you about the many possibilities.