Are you on the fence right now as to whether or not it is the right time to buy? You will often hear homeownership being promoted over renting when a family is ready, willing and able to purchase. (See my blog from August 31 regarding building wealth.) There are both financial and non-financial benefits to owning a home of your own, and homeownership is still considered a major component of living the American Dream. Based on the headlines included below, many news outlets agreed with owning rather than renting after they reviewed a recent report from the Harvard Joint Center for Housing Studies and Enterprise Community Partners.
The report states that the number of households spending 50% or more of their income on rent is expected to rise by over ten percent in the next decade. About this group, they say:
"In a baseline scenario where both rents and incomes grow in line with inflation (set at 2 percent), we find that demographic trends alone would raise the number of severely burdened renter households by 11 percent from an estimated 11.8 million in 2015 to 13.1 million in 2025."
That is a possible 13.1 million households in the next 10 years that will be paying 50% or more of their income on rent. They concluded:
“Overall, this white paper projects a fairly bleak picture of severe renter burdens across the US for the coming decade.”
What do other experts think of the report? You can tell by the headlines they chose to introduce their stories:
“Renters, get ready to take it on the chin” – CNBC
“The Rent Crisis Is About to Get a Lot Worse” – Bloomberg Business
“Renters Will Continue to Struggle for the Next Decade” – World Street Journal
“Why the renting crisis could be about to get a lot worse” – Fortune Magazine
“Soaring rents are a problem that will only get worse” – Business Insider
“High rents are here to stay” – The Real Deal
If you are thinking about buying a home and are financially positioned to do so, sooner may be better rather than later. The rental market is tight and is expected to remain that way, rents will continue to rise over time, and so will the costs related to homeownership. Confused as to what to do? The best thing may be to sit down with a real estate professional to discuss your options. And, as always, if I can help in any way please don't hesitate to ask!