The cost of homeownership continues to go up, with both home prices and interest rates on the rise. For many home buyers, this raises the question: Is buying a house still worth it in 2022?
While buying a house may not be the best option for everyone right now, it is still worth it for those who are financially ready. Owning your own home has many benefits, including building equity, tax breaks, and stability. Even in a market like this, experts agree that buying a home is still a better financial decision than renting in most cases.
Still thinking it over? I get it….read on!
1. Increased Home Values Mean Increased Home Equity
The ability to build equity is one of the chief benefits of homeownership, as it sets homeownership apart from renting, which has no return on investment. Over time, increased home equity can add to your net worth and give you a low-cost source of cash as needed.
2. Homeowners Have Fixed Costs
Purchasing a home with a fixed-rate mortgage offers numerous benefits. One of the best things about it is that your monthly principal and interest payment will remain the same over the life of your loan, regardless of how the market changes. This makes it easier to budget for your expenses, and you can be assured that your housing costs won’t increase unexpectedly. Additionally, real estate is still one of the best ways to create generational wealth, so by buying a home you’ll be investing in your future as well.
3. Homeowners Have Extra Opportunities
While a rental unit offers some of the same benefits as homeownership, such as stability and community, it likely won’t allow for personalization the way a homeownership does. Homeownership offers privacy from neighbors, especially if you select a single-family detached home.
Additionally, homeownership offers the chance to build equity in your home that can be tapped via a home equity loan or line of credit (HELOC). This money can be used to fund home improvement projects, pay off debt, cover the cost of a wedding or other major expense, or virtually anything you desire. Finally, claiming a mortgage interest deduction on your taxes if you finance your property can result in significant savings.
And then there are other benefits, such as the intangible benefits of feeling more rooted in your community and having more stability over time.
Disadvantages of buying a home
There are many benefits to buying a house, but it’s not the right move for everyone. Here are some of the downsides to homeownership in any market, particularly the current one.
Purchasers will need to be organized and have a plan when looking for a home.
It’s becoming more and more difficult to win bidding wars in the current housing market, leaving many would-be homeowners out in the cold. You don’t want to end up borrowing more money than you can afford, or paying a higher interest rate than necessary.
While home prices won’t continue to skyrocket as we saw in 2020 and 2021, they should keep growing over time. And even at a slow rate of appreciation, this leads to significant equity growth, making homeownership one of the best investments available.
What About Inflation?
The experts we’ve interviewed throughout 2022 agree that, while a housing crash is possible, it’s highly unlikely. So, if you’re thinking of buying a home, don’t let fears of a housing crash keep you from making the investment. In fact, buying a home may be a wise decision, even if prices are high right now.
Here are three reasons why:
- Homes tend to appreciate in value over time.
- A home is a great way to build wealth over time.
- Owning a home gives you stability and peace of mind.
If You’re Buying, Here Are Your Next Steps
- Consult with an experienced Realtor and mortgage lender, who can help you explore what options are available at your budget and shine a light on your financial situation.
- Carefully research the state of your local market. If there is an influx of jobs, there will probably continue to be more buyers and sellers, resulting in continued growth in home prices. In a less robust market, it might be smarter to continue renting in anticipation of a possible market correction and lower home prices.
- Provided your finances are in order, your job is secure, you can afford the monthly payments, and you’re working with a skilled real estate agent, buying a home may be the better option for you.