As noted in the National Rent Report, “National average Y/Y rent growth is a modest 1.7%.” This year-over-year increase may not sound like much, but it can add up – fast. The math on how much extra it will cost you over time surely doesn’t lie.
Here’s an example:
On a $1,500 rental payment, an increase of 1.7% adds a cost of approximately $25 per month. When multiplied by the 12 months in a year, that’s a $300 overall annual increase. The price continues to multiply when you rent year after year, as rental prices rise. While $25 per month may not sound substantial, for many households, this value is equivalent to being able to afford a gym membership, a couple of streaming service subscriptions, or a family pet’s food budget. History shows how average rental prices have been increasing each year, and even when they’ve leveled off for a month or two on occasion, the increase over time has proven to be quite significant. This graph shows how rents have grown since 2012 alone:
Renting, however, isn’t the only answer to meeting housing needs. According to the Freddie Mac Forecast, “We expect mortgage rates to remain low, averaging 3.8% in 2020.” That’s great news if you want to make a jump into homeownership. You can put the money you’re spending in rent toward your own equity, strategically investing in your financial future while it’s less expensive to borrow money for your mortgage. Why not lock down your monthly housing expense and at the same time build additional net worth for you and your family? If you’re thinking about buying a home, consider the financial benefits of what homeownership can do for you, especially while the market conditions are in your favor.
With average rents rising, now may be a great time to stabilize your monthly payment by
becoming a homeowner and locking into a low mortgage rate.