Weekly Special | August 26, 2024

Buying vs. Renting: What’s Smarter Now?

I ‘ve just released a new video that dives deep into why buying a house in the US has become so challenging right now.

By comparing the current housing market with past decades, I reveal why securing your own home is more difficult than ever. You might find it surprising, but waiting for prices to fall may not be the smart strategy you think it is.

A frequent comment I receive from viewers is that they’re holding off on buying a home right now. This approach makes sense if you already own a home with a low mortgage interest rate from three years ago, but what about those who have to move and must choose between buying and renting?

Today’s graph illustrates why purchasing a home is more advantageous than renting for those planning to stay put for a while. Home price growth continues to outpace incomes and rents, allowing long-term homeowners to build equity that significantly offsets the ongoing costs renters face.

Both rents and home prices have risen more than 8% annually since the pandemic began. As a result, median home buyers have gained nearly $100K in equity over the past four years, which averages out to about $2,100 per month.

I foresee tough times for buyers continuing in the near future. While a surge of new apartments will help bring rent growth back to a more manageable pace, builders can’t produce cheaper single-family homes.

I expect home prices to keep climbing, with some fluctuations driven by mortgage interest rates and the health of the broader economy.

The original one-page Weekly Special PDF is still available.