Is it better to rent or buy a property is a debate that has been going on for a very long time. There are arguments that are valid on both sides however in 2022 renting or buying property has many other factors that can massively impact the decision made. This article will aim to address this and more so you can make an informed decision on whether renting or buying would be worth it for you.
In 2022 we find ourselves in a time post-pandemic which has had an effect on the economy nationally and globally. This has resulted in higher inflation, high interest-rates and increased cost of living. These factors combined have meant that national property prices whether rental prices or sale prices have also increased.
The S&P CoreLogic Case-Shiller Index found that by January 2022 home prices had jumped by 19.2% year on year while the average cost of a single-family rental property also increased by 12.6%. Couple that with the fact that since January, prices have continued to rise. This means that regardless of the argument of renting vs. buying a property, in 2022 it is an extremely expensive time for either. However, it is important to note that personal requirements and personal financial positions come into play. So it is important that you have great self-awareness before you make any decisions.
What are the benefits of buying a property vs renting
Here are some of the benefits that you can expect when buying a home vs renting:
Buying a property gives you freedom and security
By owning your own home you can be safe in knowing that whatever you choose to do to your property is completely up to you. You are free in making decisions on the look and feel of your property and any changes you do make are completely yours to benefit from. Additionally, once you have paid off any mortgages and have no outstanding payments you are then in full ownership of the property and do not need to worry about making any more monthly payments towards the purchase of the property. .
Buying a property can save you money
In the long run, buying a home can save money. How? Well, if you choose to solely rent a home you will be spending a fixed amount monthly forever however, with buying a home eventually you will have paid off the amount owed which then means you no longer need to pay anything towards the property. Of course in the short term, it may be more expensive when you look at home repairs and other costs associated with owning a home compared with a fixed monthly rent payment.
Buying a property can make you money
When you purchase your own home you can always sell for profit. Regardless of how much equity you have in the property, if the value of the property rises then you stand to benefit in the event of a sale. As mentioned earlier in this article, home prices had jumped by 19.2% since the previous year so if you were to sell and received good offers you could also receive profits in that ballpark. It therefore makes buying a home a great financial decision.
What are the disadvantages of buying a property vs renting
With anything there are always pros and cons. Here we consider the negatives of buying a home.
Buying a property is a big financial commitment
When you buy a home you will most likely opt for a mortgage which would require a deposit and then monthly payments for a set period of time. It therefore means you are tied in for the long run and if you don’t have any additional savings it may require living on a budget for longer. Additionally, if you opt for a cash purchase it can mean you are spending a large amount of money in one go which can be a big decision to make.
Buying a property comes with responsibility
When you purchase your own home you are responsible for any repairs or costs associated with the upkeep of your property. When you rent a home the landlord would normally take care of any repairs. This can mean you will need to find repairmen or learn how to carry out repairs yourself.
Buying a property can restrict you
If you like to travel or like to move around and live in different areas, buying a home can make this difficult. You would need to sell your property to move anywhere else unless you have additional finances to cover the costs. It is something that needs to be considered though.
Key Takeaways of Buying a property
Buying your own home involves making significantly higher initial costs and additional costs for the upkeep of the property through repairs can increase the financial strain. However, it can give you flexibility, freedom and security.
What are the advantages of renting vs buying a home
Here are some advantages of renting your own home:
Renting a home can give you flexibility
When you rent a home you will always have the option to move elsewhere at the end of the lease or you can break a lease and pay additional costs that may be required. So if you want to move for jobs, education or even just a change of space by renting you will never be tied down to one area as homeownership can.
Renting a home is predictable
If you like knowing exactly how much your monthly expenses are and how much you need to have then renting can give you this predictability. You will always know exactly how much your rent will be. With homeownership you may have repairs and ongoing costs that may change.
What are the disadvantages of renting vs buying a home
Here are some disadvantages in renting a home.
Renting a home can mean loss of security
When you rent a home you don’t own the property meaning the landlord can evict or not renew your lease. Additionally, they can also increase rents which can mean it may cost more to continue living there. This means you will always have in the back of your mind that you may need to leave soon.
Renting a home means your money can’t make money
When you rent a home you don’t have any opportunity for wealth accumulation through building equity in a property. Additionally you can’t benefit from any tax breaks that owning a property can give. This means that you will need to save or find other forms of investments to help build your financial portfolio.
Key Takeaways of Renting a Home
There are lower costs involved in renting a home and you always retain the flexibility to move on. However, you won’t be able to benefit from the money that you spend on rent.
There are many pros and cons in the debate of buying vs renting a home in 2022. However, which one is best really comes down to your own personal situation. As long as you are aware and are able to make a well informed decision then whichever one you choose would be fine. It is also worth mentioning that no matter which you choose, it doesn’t have to be forever; you can always switch although it may take time.