Housing prices continue to rise. While maybe not as rapidly as a few months ago, still moving up at a rapid pace. When you add into it rising interest rates, the pressure on housing costs is a struggle to explain and even harder for some to understand. The cost of living is higher across the board, from food and energy, to just about everything we consume or use. Nobody is happier about paying more for the “same thing”, home ownership still represents a significant value compared to almost everything else. Let me share with you, my thoughts.

Everyone must live somewhere, and there is a cost to either renting or owning where you live. While housing prices and financing costs of buying a home have risen significantly, so have rents! In many cases, the net costs of renting are rising just as fast or faster in most markets as property appreciation and those financing costs associated with purchasing are. The big difference is, when purchasing a home, you stop the rising costs of that home and take advantage of the rising market as a participant in the rise while you have frozen the cost of the debt incurred with that purchase. Yes, taxes and insurance can increase your total obligation, and maintenance and repairs also have a place in this discussion; but those costs pale in comparison to the total rise in net rent, not to mention the tax advantages of ownership and the ability to control and modify the property.

Now each market is different, and it is certainly worth it to take a few minutes and calculate a specific set of numbers based on your market. So, lets do the math. YOU select an appropriate property in your area that recently sold. Look at the cost of the home and the approximate monthly payment on that home. Then go back and look at your appreciation rate of your area for the past year and calculation what that payment might have been a year ago. Once that is done, find a rental unit that is similar in size, location, and quality and compare what is currently available in your market. Then go back and look at the rental increases in your area for the past year and compare payments. In most areas, owning works out better than renting and the P&I never goes higher, and all the property value increases are the owners to enjoy. And before you go crazy about possible repairs; they can easily be budgeted for, or you could just purchase a home warranty if that makes you more comfortable! Nobody likes higher costs; but owning almost always produces greater VALUE!

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