Renting vs Buying: The Net Worth Gap You Need To See
Renting vs. Buying: The Net Worth Gap You Need To See Trying to decide between renting or buying a home? One key factor that could help you choose is just how much homeownership can grow your net worth. Every three years, the Federal Reserve Board shares a report called the Survey of Consumer Finances (SCF). It shows how much wealth homeowners and renters have – and the difference is significant. On average, a homeowner’s net worth is nearly 40 times higher than a renter’s. Check out the graph below to see the difference for yourself: Why Homeowner Wealth Is So High In the previous version of that report, the average homeowner’s net worth was about $255,000, while the average renter’s was just $6,300. That’s still a big gap. But in the most recent update, the spread got even bigger as homeowner wealth grew even more (see graph below): As the SCF report says: “. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.” One big reason why homeowner wealth shot up is home equity. Equity is the difference between your home’s value and what you owe on your mortgage. You gain equity by paying down your mortgage and when your home’s value goes up. Over the past few years, home prices have gone up a lot. That’s because there weren’t enough available homes for all the people who wanted one. This supply-demand imbalance pushed home prices up – and that translated into faster equity gains and even more net worth for homeowners. If you’re still torn between whether to rent or buy, here’s what you should know. While inventory has grown this year, in most places, there’s still not enough to go around. That’s why expert forecasts show prices are expected to go up again next year nationally. It’ll just be at a more moderate pace. While that’s not the sky-high appreciation we saw during the pandemic, it still means potential equity gains for you if you buy now. As Ksenia Potapov, Economist at First American, explains: “Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.” But prices and inventory are going to vary by area. So, lean on a local real estate agent. They’ll be able to give you the local trends and speak to the other financial and lifestyle benefits that come with owning a home. That crucial information will help you decide the best move for you right now. As Bankrate explains: “Deciding between renting and buying a home isn’t just about cost — the decision also involves long-term financial strategies and personal circumstances. If you’re on the fence about which is right for you, it may be helpful to speak with a local real estate agent who knows your market well. An experienced agent can help you weigh your options and make a more informed decision.” Bottom Line If you’re not sure if you should rent or buy, keep in mind that if you can make the numbers work, owning a home can really grow your wealth over time. And if homeownership feels out of reach, let’s connect so we can explore programs that may make buying possible.
The Home Inspection
When buying or selling a home, a home inspection is a crucial step that can make or break the deal. Whether you're a seller looking to ensure your property is in top shape, a buyer aiming to uncover any potential issues, or an investor seeking to make an informed decision, understanding what to expect during a home inspection is essential. Your Realtor can help you find a qualified company and will be on-site as the inspector performs his tasks. The Complete Home Inspection Depending on the size of the property, a complete home inspection can take anywhere from two to three or more hours. The inspector often starts on the outside of the home and takes a look at the following items: Roofs, Chimneys, Valleys, Siding, Trim, Windows, Gutters, Drainage, Downspouts, HVAC Systems, Landscaping, Grading, Driveways, Pools and Spas, Exterior Electrical Outlets, Walkways, Patios, Decks, and Porches. The interior inspection covers the Heating, Cooling, Plumbing, Electric Panel and Outlets, Branch wiring, Drain Lines, Water Supply Lines, Cabinets, Doors, Windows, Foundation, Framing, Appliances, Water Heater, Sinks, Toilets, Bathtubs, Showers, Attic and Insulation, Signs of Pest Infestations. The inspector will take notes and pictures of each item inspected and rate it according to a traffic light system. Green means it passed the inspection, yellow/orange means it needs attention, and red equals defective. Typically, the report is available within 24 hours of the inspection and sent to the customer. This detailed document gives valuable insight into the home's health and will become the basis for either further negotiations with the seller or termination of the contract. Other Types of Inspections Occurring During the Home Buying Process 1) Walk-and-Talk Inspection A walk-and-talk inspection is a shorter form of the complete inspection but still covers the most critical aspects of the property. Often, these kinds of inspections are scheduled before a potential buyer makes an offer on a home. While it is much shorter in duration and not as thorough as a complete inspection, it can give buyers and sellers peace of mind when moving forward with a transaction. 2) Wood Destroying Insect (WDI) Inspection Most lenders require home buyers to perform a Wood-Destroying Insect (WDI) inspection before the loan can be fully approved. A WDI, sometimes called a Termite Inspection, examines home spaces prone to insect infestations and is conducted by a certified termite inspector. In the Mid-Atlantic region, the inspector will mainly look for signs of termites, carpenter bees, carpenter ants, and powderpost beetles. Suppose a WDI inspection discovers damage caused by wood-destroying insects like termites. In that case, the inspector will document the extent of the damage on the inspection report, noting the location and severity, and typically recommend a professional pest control treatment to address the infestation and repair any structural damage; the property seller is usually responsible for taking action to remedy the issue, which may involve negotiations with the buyer depending on the severity of the damage. A home inspection is an indispensable part of any real estate transaction for sellers, buyers, and investors alike. By covering critical areas such as the foundation, attic, electrical systems, HVAC systems, and plumbing, an inspection provides valuable insights into the property's condition. This thorough examination ensures peace of mind for all parties involved by highlighting any issues that need addressing before finalizing the deal. Whether you're preparing to sell your home or looking to buy or invest in one, understanding what to expect during a home inspection can help you navigate this essential step with confidence.
Fall Checklist- Inspect for Uninvited House Guests
It was two hours past the appointed time for the termite inspection. Finally, the truck pulled up, and a very apologetic technician greeted me and told me the story of what had caused the delay. He had been stuck at a house trying to catch the raccoon family that had made its nest in the attic. The homeowners, to their shock, had no idea that the animals had lived in their house for a while. Thanks to the thick roll-out insulation, they had heard no suspicious noises. Only when the ring camera caught the intruders as they were making their entry into the house did the homeowners realize they had a problem. The inspector told me that he has recently seen a significant increase in calls for raccoon removal. Catching the animals is relatively easy, but repairing the attic after they have moved out can cost several thousand dollars. Pests like mice, squirrels, rats, or raccoons typically try to enter the attic during spring or fall to raise their young or find shelter from the cold. Fall is a good time to inspect the exterior of your house for possible entryways. Think about where the animal could have gotten in and what the entry point looks like. Walk around the home’s exterior, looking all over to see if there is a breach. Check the roofline, gutters, and vents. Chewing marks around a two-inch hole may be the work of a squirrel. Smaller holes with grease marks and trails are the work of rodents like mice and rats. Additionally, a large hole torn into the roofing and siding is most likely the work of a raccoon. Next, climb into the attic and inspect for footprints in the dust, chewing marks, or fecal matter. If everything is clear and there are no visible holes in your exterior, make it a habit to inspect it regularly. Please immediately call a reputable pest control company to avoid further damage if you find evidence of animals living in your home. This will most likely save you a lot of money in repairing the damage.
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