NAR brochure aims to turn renters into homebuyers
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WASHINGTON -- Too often, renters look at their current monthly rent payment, compare it to the cost of owning a home, and decide the latter is something I can't afford. But the financial advantage of homeownership, from property appreciation to income tax deductions, makes renting more expensive, and a new brochure published by the National Association of Realtors® (NAR) explains that fact to renters.
Renting can cost seven times more annually than owning, according to the brochure, Why rent when you can buy? It challenges assumptions about renting versus buying, and it helps Realtors and renters decide if homeownership is right for them.
“Housing is a good investment, and owning a home makes sense for a lot of current renters, but many would-be homeowners are reluctant to take those first steps,” says NAR President Thomas M. Stevens.
The Federal Reserve Board estimates that homeowners have a net worth nearly 36 times more than renters. Over the past 10 years, the cost of rental housing in the United States has increased an average of 3 percent per year; average rents are projected to rise 4.1 percent this year alone. With a 3 percent annual increase, a current rental payment of $1,000 per month would increase every year and amount to $137,567 after 10 years, with no wealth accumulation.
In contrast, a $210,000 home purchased today with a downpayment of $10,000 and a 20-year fixed rate mortgage at 6.5 percent would cost a steady $1,100 per month and yield a net worth of $138,521 after 10 years, assuming an historic 4.5 percent annual appreciation rate.