There are many benefits of becoming a homeowner. One of the top benefits is being able to protect yourself from the rapidly rising rent rates. Don’t get caught in a rental trap!
Jonathan Smoke, former Chief Economist at realtor.com, reported in 2015 on what he calls a “Rental Affordability Crisis.” He warns that a record-setting number of renters are paying more than 30% of their income for housing as their wages remain stagnant. He studied a report from Harvard that found 49% of renting households are cost-burdened, meaning that they struggle to pay their other bills because of the high cost of rents, and 26% are severely cost-burdened. Rent growth accelerated throughout the year 2015, so 49% is likely already more than 50%.
So what does this mean?
It is cheaper to buy a home rather than continue to rent. The future value of owned housing is threatened as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.