We’ve all seen housing prices shoot upwards in the last few years. And while that makes a great market for sellers – it has definitely provided some hesitation and concern for buyers. Couple high prices with higher interest rates, and it’s an obvious question to wonder if renting would be better than buying given the current market. 

The quick answer: no. 

While renting does serve its purposes – like for traveling based jobs or when familiarizing yourself in a new city – buying a home is one of the wisest investments you can make. 

But why? Some of the most evident reasons include building equity, gaining a valuable asset, and earning yourself freedom.

Let’s see why – even in a crazy market – it makes so much sense to buy.

Wiser Spending in the Long Run 

With the recent increase in housing prices, it can be easy to think renting is a cheaper option. You have certain responsibilities – like repairs – covered when you rent and you don’t have to worry about wear and tear on your home, depreciating values, etc. 

But just where are all those monthly rent payments going? They leave your wallet and go straight into your landlord’s pockets. 

What does that leave you with? With years of monthly rental payments that go… nowhere. All those monthly payments, all those hard-earned paychecks, went straight to someone else and didn’t work any harder for you.

Wouldn’t it be better if your money could pay for where you live and gain you something in return? 

That’s what buying a home does. With your monthly mortgage payments, you’re progressively buying something that you will one day own. A home is a large, very valuable asset that gives you freedom and choices. You can either end up owning your home with no mortgage payment (something very appealing to many people!) or with money invested into an asset that you can later sell, most likely for more than what you paid for it. 

That’s something that renting can never do for you. 

Equity

We’ve all heard financial advisors and relators say it’s wise to buy a home and make that investment – but just why is it a good investment? 

Simply put, equity is the current value of your home, minus what you owe. It’s the only kind of asset that you can have that has significant potential to increase in value as you pay it off. A car, for instance, decreases value rapidly. So even when it’s paid off, you won’t sell it for more than what you bought it for. 

A home on the other hand typically increases value year to year. So if you bought a home for $200,000, and over time its value increases to $275,000, you now have equity up to that amount. Your home is now worth $75,000 more – and what you owe doesn’t change! By simply living in your home and making monthly payments, you increase your equity (what your home is worth) by just making monthly payments. There’s no other type of investment like that! 

Freedom 

Some say that money buys you happiness, but at least in this case it can buy you some freedom. When you purchase a home, you get tangible benefits that a renter never can. The ability to remodel, paint, add on, and make your home your own. You have the chance to leave a valuable asset for kids and grandchildren or sell down the road to make a profit. Owning your home provides you a sense of security knowing it’s yours to do what you want with it, and can use it how you want. 

With all the money you’ve invested in your home over the years, you’ll have put money towards a valuable asset that can leave you with a lot of choices. Whether you sell, leave it to your family, or end up owning your home with no monthly payment, owning your home provides room for choices that renting never can. 

So while the housing market may be higher, and buying a home may seem like a big investment, it’s a choice that leaves you gaining value and investing in something that will pay off down the road. Don’t wait, start making your money work harder for you each month as you make one of the smartest investments you can! See how David Karst can help you find the home to start making your goals come true.