Some may feel it’s a better plan in today’s competitive housing market to put a pin in buying real estate and rent instead. Is this a savvy move to make?
In an episode of The Ramsey Show, a fan named Justin asked money expert Dave Ramsey whether he should buy a home. Justin feels like buying a home is excessive since he’s single and is comfortable in his apartment.
The Landlord Benefits, Not the Renter
Practically and economically speaking, Ramsey said short-term renting is not the problem. Long-term renting is the problem.
Here’s why. Ramsey said the property you live in as a renter will go up in value in the next 10 years substantially. The person who benefits is not the renter, but the landlord.
Rents (Keep) Increasing
Over the period of 10 years, Ramsey said 100% of the time rents go up. When you buy a home, you stabilize the largest line item in your budget: housing.
“By not locking it in, you’re 100% guaranteed your largest line item is gonna go up,” Ramsey said.
Thinking of the Here and Now
One of the reasons why Justin said buying a home felt “superfluous” is because he doesn’t currently have a wife and children. Ramsey personality Jade Warshaw said it’s a problem to think about homeownership in the here and now.
“Right now, you’re unattached. Maybe in five to 10 years you won’t be. There’s a piece of this puzzle that’s an unknown and you kind of have to think through that,” Warshaw said.
Warshaw recommended asking yourself what you want your life to look like and where you want to be in five to 10 years. There is a purpose for you and this purpose can have financial attachments.
Homeownership Allows You To Build Wealth
A post on Ramsey Solutions cites equity as one of the pros of buying a home. Those who pay rent aren’t able to build equity with their money compared to those who put their money toward paying a mortgage.
Even if you don’t want to buy a home right now, Warshaw said homeownership is still something you can have and should aspire to in your life.
“I would challenge you to move past that [the idea of staying right where you are now] and really dream beyond that because that’s what you’re headed for,” Warshaw said.
More From GOBankingRates
- 6 Groceries Frugal People Buy in Winter
- I'm a Costco Superfan: These Are the 5 Highest-Quality Kirkland Food Items
- 7 Things the Wealthy Elite Do With Their Money (That You Should Be Doing, Too)
- Stay Away From Banks That Are Still Doing This in 2024