Housing costs are one of the biggest expenses facing many families today. The prices of homes across the country have increased rapidly in recent years. While owning a home is expensive, renting is even more expensive for many families. It is estimated that many people spend over half of their income just on rent. Over the long term, this makes it difficult to build wealth efficiently. In places like New York and San Francisco, rents continue to go up dramatically. Planning a financial strategy around high rent prices is not easy. Future money trends suggest that rents will continue to go up across the country.
Should You Rent or Buy?
Many people believe that buying a home is always a better option than renting. However, there are several cases where renting actually makes a lot more sense. If you are only staying in one area for less than a year, renting is the way to go. Selling a house takes a lot of money out of your proceeds. In many areas, selling costs are more than ten percent of the purchase price on a home. Although renting is expensive, this does not necessarily mean that buying is the best way to go. Over time, it is vital for people to analyze their financial situation and make the best decision.
One of the major economic problems with rising rents is the fact that personal incomes have not increased over the past couple of years. This means that people are paying a larger overall percentage of their income to rent than in prior years. Although this does not sound like a major issue, it is hard to build an investment portfolio when all of your money is going to housing costs.
What is the Solution?
Many people are living with someone else in order to share the cost of housing. This is one of the best ways to save money on housing over time. Although it may not be as convenient, there are major advantages to sharing spaces with other people. If you live in a city like San Diego or Miami, owning a house is probably out of the equation. However, renting an expensive place all by yourself does not make a lot of financial sense. Look for a safe roommate to help share the cost of housing, and over time, this will help you save money.