MINNEAPOLIS (WCCO) — A new survey says the average American now pays $1,443 per month on their home.
Compare that to data that shows the average monthly rent for a three-bedroom apartment is $1,682/month.
So, is it better to rent or buy? Good Question.
“It depends,” says Ross Levin, CEO of Accredited Wealth Investors. “I wish I could give you a yes or no.”
He says owning a home used to be the best way to create wealth, but that all changed after the 2008 financial crisis, when houses depreciated dramatically. He also says rising interest rates and changes to deductions in the new tax code could make home ownership not as valuable as it once was.
“I think renting is a good option for some people right now,” Levin says.
But not everyone. He says he asks people considering both options: Will you have stability? Do you want a connection to the community and the schools?
“Don’t discount the financial things, but you really need to know what you want your life to look like,” he says.
He recommends people live in their home for a minimum of three years to be able to make their money back. Five years is better and 10 years is better than that. That could change, depending on a home appreciation and real estate commissions.
There are rent vs. buy cost comparisons all over the Internet, but Levin says those don’t always take into consideration important homeowner costs like repairs, how property taxes could change and the opportunity cost of investing a down payment somewhere else.
“Those costs shouldn’t dissuade you from home ownership, they should just make you consider it more closely,” he says.