NOT Owning a Home Can Be Costly
The vast majority of homeowners in the US would, almost certainly, tell you that one of the biggest benefits of owning a home would be the build-up of equity, over the years. That monetary gain can translate into tens-of-thousands of dollars, quite quickly. In fact, the National Association of Realtors tells us that if a family purchased a median-priced home at the beginning of 2019, that family would build almost $38,000 in wealth over the next five years!
Owning a home, also, establishes a true sense of community, a feeling of security, freedom to modify the home’s features on-demand, and tax benefits where additional deductions mean more money in one’s pocket, at tax time. Owning a home is symbolic of the American Dream of achieving success and enjoying one of the biggest fruits of that success. But, what about those who choose to not own a home? Are there some hard-core disadvantages of continuing to rent, year after year, that could be considered ‘costly’ when compared to owning a home?
Let’s take a peek…
The Money Factor
As mentioned, equity is a big advantage to homeownership. When one sells a home and ‘cashes in’ on the accumulated equity, that money can be used towards the down-payment of a dream home or used for a smaller home with the rest of the equity ear-tagged for other personal pursuits. Renting, obviously, never allows one to enjoy that kind of monetary gain. And let’s not forget that once a home is paid off, one lives mortgage-free which sets one up for a more comfortable retirement. Though becoming mortgage-free may seem far off, it is a real goal with real results that happen every single day. In fact, according to Forbes, almost 40% of homes in the US had a free-and-clear title, during 2019. Can you imagine completely eliminating the monthly cost of the roof over your head? It’s something renting can never offer.
Renting can mean making payments every month, forever. And when rent goes up, a renter’s pocketbook becomes smaller. The Dallas Business Journal shares interesting insight from the Joint Center of Housing Studies at Harvard University: In probably most municipalities – if not all municipalities – rents continue to go up faster than the cost of living for other goods and services. Rents in the US have been skyrocketing since 2012 causing renters to face a tremendous burden.
For renters, there is always the possibility, too, of the property being sold. A new landlord could charge higher rent or it could mean the renter might have to move out, altogether. On the other hand, homeowners who select a fixed-rate mortgage have the assurance their monthly payments will remain the same and they have comfort in knowing they can remain in their homes for as long as they desire.
The Emotional Factor
It would be unfair to say that renters aren’t in a position to feel an emotional connection with their rental property; undoubtedly, many of them do. However, there is just ‘something’ about knowing you own a piece of property that makes a psychological difference that is genuinely felt. A true sense of contentment can be realized when roots are planted in a property one can call his or her own. Psychology Today states that homeowners, consistently, stay put longer than renters, and those who own homes feel an enhanced sense of stability. This, in turn, helps to nurture a closer-knit community where neighborly connections become more intimate and interactive. Borrowing a cup of sugar or delivering baked cookies to the next-door neighbor who shoveled the snow out of your driveway may sound trivial, but when neighbors become good friends, it’s that kind of down-home closeness that makes all the difference in how one feels about where they live and how they live.
The Added-Income Factor
Home-ownership gives one an expansive amount of leeway to do whatever one wishes, within reason, of course. Part of that leeway is choosing to rent out part of one’s home for passive-income purposes. You might welcome a relative or college student to rent out a spare bedroom & bathroom. Then, there is the notion of renting out half of one’s garage for someone’s storage needs. Bottom line: having a potential passive-income stream is at the homeowner’s disposal.
Homeowners who would choose to use a dedicated part of their home, strictly, as a rental can deduct a proportionate amount of the mortgage-payment interest, insurance, utilities, and more. Renters, however, do not have the freedom to rent out part of their property but must adhere to the guidelines of the property owner.
The Convenience Factor
Though renting might have its advantages, providing a private yard for children and pets wouldn’t be one of them. Children thrive in environments where they have the space for exploration and discovery, and homeowners and their children enjoy private yard space that renters can, only, wish for. Adding swimming pools, hot tubs, trampolines, basketball hoops, swing-sets, flower and vegetable gardens, etc is part of what home-ownership is about – including personal embellishments that make a home a very special, personalized space.
Pets, too, become a consideration regarding home-ownership. Americans are a pet-loving bunch, and having a yard that caters to one’s furry buddy is a very big deal for many pet parents. Many rental properties do allow pets, but that privilege can come with an added cost called ‘pet rent’. Pet rent can range from a small added fee each month to a hefty amount to cover any potential damages. In most cases, pet rent is not refundable under any circumstances.
Enjoying maximized privacy is a big part of the convenience factor of home-ownership, too. Though home-ownership nurtures a ‘neighborly feel’, one still enjoys the privacy home-ownership provides. Whether it’s soaking up some sun in the backyard by the pool or hosting a BBQ for a few close friends, private spaces translate into enhanced socialization, convenience, and solitude which offer a mentally therapeutic component.
After it’s all said and done, not owning a home can be costly from a variety of perspectives. Perhaps, those who would know that better than anyone would be those who used to rent but, now, enjoy the rewards of home-ownership. Reverting to renting is something most homeowners would consider unthinkable, and the reasons are clear.