There comes a time when renters think about extending their lease or taking the leap into homeownership. They take a look at their earnings, their savings, and then decide what makes the most financial sense.
That equation will take into consideration their monthly housing costs, tax advantages, and other incremental expenses. Using these measurements, studies usually show that it’s still more affordable to own rather than rent.
There is, however, another financial advantage to owning a home that’s often forgotten in the analysis – the wealth built through equity when you own a home.
Odeta Kushi, Deputy Chief Economist for First American, hits this in a recent blog post. She explains:
“Once you include the equity benefit of price appreciation, owning made more financial sense than renting in 48 out of the 50 top markets, with the only exceptions being San Francisco and San Jose, California.”
ATTOM Data Solutions, the curator of one of the nation’s premier property databases, recently analyzed the typical home-price gain owners nationwide enjoyed when they sold their homes. Here’s a breakdown of the findings:
The typical gain in the sale of the home equity has increase drastically over the last five years.
CoreLogic, which is another property data curator, also weighed in on the subject. According to their latest Homeowner Equity Insights Report, the average homeowner gained $17,000 in equity in just the last year alone.
Here are the seven major home price appreciation forecasts for 2021:
The National Association of Realtors (NAR) reported on January 22nd, the median-priced home in the country sells for $309,800. If homes appreciate by 5% this year (which is the average forecast), the homeowner will increase their wealth by $15,490 in 2021 through increased equity.
When you make your plans for this year, be sure to consider the equity benefits of home price appreciation as you weigh the financial advantages of buying over renting. When you make this decision make sure to connect with Apex Home Loans to steer you in the right direction and help you find the loan that best fits with your financial goals. Contact us today to learn more.