Rents are skyrocketing across the country and over half the renters are paying over 35% of their income toward rent. Currently, rents are increasing at an average rate of 3.5% per year compared to home prices which are rising at a rate of 5% per year which means renting is becoming more costly and less affordable.
The table below illustrates how much rent you will pay your landlord in 3, 5, and 10 years based on an annual rent increase of 4% per year. The average rent in the United States is about $900 per month and you will notice that in 5 years you will pay your landlord about $60,000 and you will have nothing to show for it. Ouch! I think it is time for you to seriously consider buying a home versus throwing money away on rent. Wouldn't you agree? Try our Rent vs Own calculator to see if buying a home is right for you.
| Rent | 3 Years | 5 Years | 10 Years |
|---|---|---|---|
| $700 | $26,727 | $46,409 | $103,075 |
| $800 | $30,545 | $53,039 | $117,800 |
| $900 | $34,363 | $59,669 | $132,525 |
| $1,000 | $38,182 | $66,299 | $147,250 |
| $1,100 | $42,000 | $72,929 | $161,975 |
| $1,200 | $45,818 | $79,559 | $177,000 |
Finally, there is nothing like owning your own home. I started out as a renter, and the thought came to me one day "why am I paying thousands of dollars in rent?" I bought a condo in Chicago and lived there for five years, built up some equity, and then moved to a 3-unit building and I became a landlord and collected rents from other people. Today, I live with my wife and kids in a beautiful single family home and I have my own backyard and garage and nobody tells me what to do. Is this what you want? A first time home buyer needs to start somewhere, and buying a moderately priced condo or starter home might be your best bet.
