Renting Costs More than Owning
RENTING CAN COST 7 TIMES MORE THAN OWNING
Source: REALTOR® Magazine OnLine
Renting can cost more than seven times more than owning per year, according to a newly revised consumer education brochure from the NATIONAL ASSOCIATION OF REALTORS®.
The brochure poses the question: “Why rent when you can buy?” and challenges certain assumptions about renting versus buying. It’s goal: To serve as another tool to evaluate whether home ownership is the best move for you.
Here are some key benefits of buying as noted in the brochure:
- The Federal Reserve Board estimates that home owners have a net worth of nearly 36 times more than that of renters.
- Over the past ten years, the cost of rental housing in the United States has increased an average of 3 percent per year, average rents are projected to rise 4.1 percent this year alone. With a 3 percent annual increase, a current rental payment of $1,000 per month would increase every year and amount to $137,567 after 10 years, with no wealth accumulation.
- By contrast, a $210,000 home purchased today with a down payment of $10,000 and a 20 year fixed rate mortgage at 6.5 percent would cost a steady $1,100 per month and yield a net worth of $138,520 after 10 years, assuming an historic 4.5 percent annual appreciation rate.
The decision to become a home owner involves financial and emotional considerations but the benefits are clear.
