Escape the Costly Rental Cycle in 2023!
Every year, renters must make a critical decision: renew the lease or buy a home? This year is no exception. Yet before you delve deeply into your available selections, comprehending the genuine expenditures of renting in future years will be beneficial.
Over the past twelve months, both existing and new renters have experienced a rise in rent according to data from realtor.com – proving that this market isn’t stabilizing anytime soon.
“Three out of four renters (74.2%) who have moved in the past 12 months reported seeing their rent increase. The strain from recent rent hikes isn’t exclusive to renters who have recently moved. Nearly two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months, and likely renewed their lease, have also reported increases in their rent.”
Not surprisingly, the Census reports that rents have been steadily increasing since 1988 (please refer to the graph below). Thus, this current trend is well-established and based on long-term data..
If you’re contemplating renting as an option in 2023, it is undoubtedly worth considering whether this trend will continue. The realtor.com Housing Forecast for 2023 predicts that rents are expected to keep rising (see the graph below):
As shown in the graph with green bars, rents are projected to increase by 6.3% this upcoming year. While that figure is still higher than the historical average from 2013-2019 (seen as blue bars on the chart), it’s not as dramatic an increase when compared to prior years’ rent hikes. This means if you’re expecting to sign a lease again and haven’t already renewed, prepare for rental rates to be higher than expected.
Are ever-increasing rents consuming your budget?
Consider the option of homeownership for more stability! Homeowners can lock in their monthly expenses over the length of their loan, providing a secure financial foundation. As Freddie Mac says:
“Monthly rent payments may increase over time, but a fixed-rate mortgage will ensure that you’re paying the same amount each month. With a fixed-rate mortgage, your interest rate is locked in for the life of loan. Steady payments allow you to budget wisely and make plans for the future.”
Choosing to lock in your monthly housing costs for the duration of your loan is an incredibly beneficial decision when you are thinking about relocating this year. You won’t need to stress over whether or not you will have to revise your budget because of yearly hikes, which landlords may require with their renewal cycle.
Homeowners gain the bonus of building up home equity, which has seen an exceptional increase. CoreLogic’s Homeowner Equity Insight report revealed that homeowners accrued $34,300 in equity only over the last 12 months! Even though you are shelling out money to cover your rent when leasing a property, paying for mortgage on a house allows you to store wealth through accumulating home equity – essentially forced savings!
Bottom Line
If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s chat to see how you can begin your journey to homeownership today.
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