If you’re young and you rent, you may want to reconsider what you owe.
According to the US Census Bureau, renters will spend almost $100,000 on rent by the time they hit 30 for a ten year period. That’s 45 percent of your income. Why is that number kind of backbreaking? Because that’s more than the 34% of your income people spend (on average) on housing—or should spend.
This isn’t an old man yelling at millennial clouds though. On the contrary—millennials have very good money habits. A recent Bank of America survey found that 47 percent of millennials have $15,000 or more in their savings. But the Census report reveals that renting remains an issue.
What would have happened if you had been owning instead? The median home value according to Harvard’s Joint Center for Housing Studies in Texas’ top five cities was $145,124 roughly 10 years ago. Now? The median home value across those five cities is $199,460! Imagine keeping half the money you’ve spent over a ten year period if you suddenly decided to sell your house?
In addition, if you’re in a low income bracket, you are more likely to have less than $500 each month after paying for rent and utilities. That’s simply less you’ll have for food, health care, insurance, education, and/or retirement. As Housing Perspective notes:
While residual incomes for the lowest-quartile group are slightly higher than they were in recent years, they are still 18 percent less than in 2001, when these households had $600 in residual income (in inflation adjusted dollars). Moreover, 48 percent of households in the lowest-income quartile consist of more than one person, and 27 percent have at least one child present.
That’s the benefit of owning over renting. So what’s the credit difference here? If you own, moving can mean you get to take money with you because it’s easier to sell a house than an apartment. And good credit is what it takes to buy a house. Good credit can save you over $10,000 on getting approved for a 10 year loan versus a 15 year old loan or 30 year old loan.
On top of all this, some states favor landlords over renters. For example, in Vermont, there is no limit for a security deposit. In Arkansas, there is no law protecting the tenant from witholding rent if the landlord has failed to provide essential services, nor can a tenant reduce their rent by paying for their own home repair.
For a FREE credit evaluation that gets you owning instead of owing, contact us by visiting us at our committed offices at 6989 Alamo Downs Pkwy, San Antonio, TX 78238, or call us at 210-520-0444.