Owning a home has long been a quintessential part of the American Dream. But a new survey reveals that some Americans doubt whether that dream is actually attainable in 2023.
The report, published by real estate education platform Home Bay, found that 35% of renters do not consider homeownership a part of the dream — largely due to it being considered unrealistic.
That shift in mindset is understandable when 72% of renters surveyed say they’ll never have enough money to buy a home. Finding an affordable home isn’t easy, either. Since 2020, the average home price in the U.S. has skyrocketed by $150,000.
This grim outlook leads to 61% of renters saying that Gen Z and millennials will never reach the same rates of homeownership as baby boomers.
Although owning a home might seem difficult, there are still many benefits that make it a goal worth the hard work and sacrifice.
1. Owning a home offers more independence
When you own your home, you set your own rules. A landlord or leasing company can have a lot to say about how you live.
They can decide how many guests you can have over and when. They can tell you what internet and waste removal companies to use and which ones you can’t. They also have a right to enter your residence at any time.
And with 56% of renters saying they’re generally suspicious of their landlords, it’s nice to be in charge of your domain as a homeowner.
2. More stability from month to month
Nearly half of renters already believe they’re being overcharged for rent, and what you pay won’t improve over time. Since 2000, rental prices have increased 77% while median income is only up 16%, according to U.S. Census and housing data.
As a homeowner, you’re in more control of what you pay every month.
While a landlord can, and will, increase rent over time, your monthly mortgage payment is more stable regardless of inflation. You may be able to reduce what you pay each month by refinancing your loan down the road.
3. A smart investment for your future
It’s important to save for the future. Not only do you want a stash of cash for emergencies, but 66% of renters say it’s very important for them to have savings to live comfortably during retirement.
Along with a 401(k), owning a home is one of the best ways to invest for retirement. Homes appreciate over time, which means your equity — the part of the home you own — will also increase over the years.
And unlike the stock market, your home’s value will continue to grow and is less likely to experience drastic downturns in value.
4. The potential to make money
Not only does homeownership give you a means for building wealth in the form of equity, but it can also put more cash in your pocket now.
You can make your residence a partial investment property by renting out a room or guest house to a long-term tenant or as a vacation rental. Business travelers and families, in particular, are often on the look for a cozy place to stay off the beaten path.
Vacation rentals also give you more flexibility. You can make your room or home available for rent as little or as often as you like. That means you can block off dates when you might need the space or a break.
5. Get the space you need
Owning a home often means having more space than an apartment unit. Whether you’re looking to expand your family, work from home, or have a hobby that requires a workspace, flexibility in space will enhance your lifestyle.
While rentals will always be limited in size, when you buy a home, you have the freedom to expand onto your property or customize spaces for your needs. Plus, any updates you make can add value to your home.
6. You can make the home your own
When living in a rental property, you likely won’t be able to do much to personalize your home. That means living with whatever paint color and finishes the landlord makes. You may also be restricted from hanging up pictures and artwork or curtains.
As a homeowner, you’re free to update your home to taste. Just so long as your renovations are consistent with city ordinances.
7. It’s the "good" kind of debt
With 71% of renters saying becoming debt-free is a very important financial milestone they hope to reach, it’s understandable they may be hesitant to take on more debt in the form of a home mortgage loan. But not all debt is created equal.
Home loans are considered good debt, because unlike credit card debt — where assets decrease in value while interest grows — your home will continue to grow in value. Plus, even at 6.5%, the interest on a home loan is less than what you’ll pay on credit cards, which can be as much as 25%.
8. It comes with tax benefits
As a homeowner, you are eligible for tax perks that aren’t available to renters.
Depending on where you live, you may be able to deduct the interest you pay on your mortgage, insurance premiums, and property tax. New or first-time buyers are also often eligible for tax credits that can increase your return.
Check with a real estate expert to learn more about tax benefits in your state.
9. You can find a path that works for you
Although many people think you need a 20% down payment and 30-year mortgage to buy a home, there are many other options. For example, you can make a deal to purchase from a family member, or sign a rent-to-own agreement.
Rent-to-own programs allow you to make rental payments over a period of time that go toward homeownership. And it’s an approach that appeals to renters — with 68% saying they’d consider going with a rent-to-own property.