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Homeownership Is Like Renting a House With Benefits Facts to Remember as You Look for a Place to Live

Ken is a retired entrepreneur. He is married with two adult children and nine grandchildren. He loves traveling and any beach that has sand.

Photo by Joshua Coleman via Unsplash

Photo by Joshua Coleman via Unsplash

Facts to remember as you look for a place to live

The housing industry is soaring again! Buying a home at a reasonable price is nearly unheard of these days, especially if you want to buy a newly constructed house. That means trouble is lurking on the horizon.

One generation that is being significantly impacted by these high prices is the Millennial group, defined as those who were born between 1980–2000. It is leading them to alter their thoughts about purchasing a house in the first place. As a consequence, over 30% of the age group 18–34 still reside in their parents’ homes.

Many areas of the country are faced with housing shortages, and vacant land to build on is becoming scarce. These factors continue to drive up the average sales price for houses in today’s market. Lumber shortages still exist as well, attributable to the COVID-19 shutdown.

Many Millennials find themselves saddled with education debt, which taxes their ability to find affordable housing. Couple this with the occasional maintenance needs of a homeowner, taxes, and insurance, and we can see a clear picture of what the future holds — more renters and more rental complexes, out of necessity.

No wonder Millennials are still living with Mom and Dad! The law of supply and demand is working heavily against them. Even if they can afford to purchase a home, very few will realize the advantages of owning vs. renting.

With home ownership, one huge advantage over renting is the house’s ability to appreciate. The re-sale value can allow the seller to perhaps buy a better home, or buy in a better location. Another significant advantage is the house payment usually remains fixed. Landlords can and will raise the rent. They also don’t always take care of maintenance repairs promptly.

In a renting environment, you may not like the person upstairs or beside you playing music late at night, or stomping on their floor. You are also exposed to their negligence. If they start a fire or have a burst water hose, your rental may absorb smoke or water damage. That could be a major inconvenience for you at a time when you weren’t expecting it.

There’s the pets issue, as well. Some landlords allow them, others won’t. What to do with Fido can be a challenge if you decide to move to an area that won’t allow you to keep pets.

Living with Mom and Dad certainly has its advantages. But, it’s doubtful you’d feel comfortable inviting friends over for a party or bring someone home after a date. Many parents still maintain the “my house, my rules” mentality, which can be quite vexing for a 30-something to navigate.

Besides these, how strongly do you cling to your sense of independence? How often will your parents call upon you to “fix this,” or “cut the grass,” or perform some other mundane chores you never had to do before?

Some in this age category are even resorting to not owning a vehicle, saving them a car payment, and not having to shop for insurance. That may work fine in an urban area, but would soon be unwieldy in most suburban neighborhoods.

One thing is certain in today’s world: Life gets more complicated every day. There are no easy answers to this dilemma. Perhaps the only solution is to change our perception of what is and isn’t acceptable to us.

Lawn mowing is a home owner's responsibility

Lawn mowing is a home owner's responsibility

Advantages of owning a home

Looking for a potential home to buy at a time when prices are near all-time highs is complicated. Price is only one of many considerations to address:

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1. Will you qualify for financing if you haven't had a long tenure at your present occupation?

2. Will you have the necessary down payment if you are still lugging around college debt?

3. What are the transportation options in the area where you want to buy a home?

4. Are you prepared to pay the closing costs associated with the house purchase?

5. Are there renovations needed to the purchased home, and do they need to be addressed quickly to make the house more livable?

These are some of the more common concerns that arise when buying a home. Others will be present and dependent on your specific situation.

One thing is certain: In most areas of our country, houses appreciate in value. With that appreciation, a homeowner gains peace of mind, knowing they can sell the house for more than what they paid for it.

Additionally, this value difference can be a substantial opportunity to recoup some of, if not all, the interest you paid on the house. I have had the good fortune to have that happen to me.

Here's an example of how that works:

Let's say, 15 years ago, you bought a house for $200,000. You decide to move this year, so you put your house up for sale, and get a fast offer of $400,000 to sell your home. You have gained a nice profit of $200,000. Now, take it a step further.

Subtract the amount you would have paid in rent from the $200,000 difference and you will have regained most, if not all of those rent payments you made for the past 15 years. That's a big advantage to owning, versus renting, if you ask me.

It might well be the deciding factor for the Millenial generation to consider when weighing one against the other.

One final thing people bring up to me all the time is that the homeowner has to pay taxes and insurance, which is true. However, what they don't want to recognize is that the rent payment is usually still more than the house payment, even after taking all the costs into consideration.

Do yourself a favor and run your own numbers to see how it stacks up in your specific situation. If you're like me, I'm happy to be a homeowner.

Thanks for reading this!

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

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