5 reasons why renting is better than buying in 2020
For decades, owning a home has been the cornerstone of the American dream. But in 2020, this dream seems to fade for many Americans. Writes about it Fox Business.
The latest housing crisis is still in the focus of attention of potential home buyers, and problems in the economy due to the coronavirus do not add optimism.
Unwillingness to enter the housing market is justified. Buying a home is usually the largest transaction that most people make in their life.
With rising housing prices and the high cost of home ownership, more and more people question the validity of buying a house as a whole.
To avoid the negative risks associated with home ownership, renting a house quickly turned into a preferred alternative.
5 reasons why renting is better than buying in 2020.
In the modern economy, flexibility comes first. A job change can contribute to long-term earnings and professional development.
Geographic flexibility is essential to exploit these opportunities. With the average American worker changing jobs about 12 times over the course of their careers - and this rate continues to rise - short-term rentals are the new norm in the United States.
Flexibility remains at the forefront of financial solutions for those who want to optimize their career growth, and therefore short-term lease obligations are a good choice.
2. Debt continues to grow
Americans have debt problems.
According to a Northwest Mutual Planning & Progress study, the average American adult has $ 30 in personal debt, not including mortgages. This debt is a mixture of student loans, credit card debt, and other consumer debt.
In this regard, Americans are forced to make large monthly payments in order to ease their debt burden, leaving little room for savings, the creation of an emergency fund or investment.
Nearly 70% of Americans have savings of less than $ 1.
Focusing on fulfilling their immediate monthly financial obligations leaves people little time to plan their economic future, including accumulating a down payment on a mortgage.
3. Down payments remain an obstacle
The U.S. housing market is getting more expensive, with average home prices hitting a record high in 2019.
As a result of this growth, it is becoming increasingly difficult for consumers to save enough capital for the traditional 20% down payment on a mortgage. This standard barrier to entry into the US housing market seems to be constantly growing.
It takes buyers about 7 years to set aside enough money for a 20% down payment. In the context of stagnant wage growth, potential home buyers are forced to postpone the purchase.
4. Urbanization is expensive
Over the past few decades, there has been a return to urbanization. Major cities such as New York, San Francisco, Los Angeles and Chicago have attracted many employees looking for high-paying jobs. As a result of this influx, housing prices and the cost of living in these cities continue to rise.
On the subject: 6 major US cities with the most affordable rental housing
Due to higher property taxes, down payments, and ever-increasing living expenses, many people find that buying a house is unprofitable.
5. The concept of financial success has changed
A new definition of financial success takes hold of American culture, especially for those who first enter the housing market. The previous picture with a country house with a white fence, as an indicator of economic success, does not resonate with modern culture.
Although people ultimately want to have a home, they do not consider home ownership a symbol of status and financial success. Instead, they focus more on lifestyle, early retirement, and other goals.
A new definition of financial success means a different set of priorities.
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