It's EXPENSIVE to Skip #Kitsap Homeownership
One of the most pressing concerns our buyer clients understandably have is, "How much is this going to cost?" It's especially true for our first time homeowner folks, because it can seem like you're paying for new stuff every week, and haven't even moved in yet. Familiarizing our newbie clients with the whole process and making sure that they know the expected costs up front is one of our most important jobs, because making sure these folks have a good experience is how we turn renters into homeowners, a real passion of ours beyond the obvious fact that we (duh) are selling houses.
However, we've posted a great many articles on "How much does it really cost?" and your agent will spend a long time combing over this with you in detail. What we'd like to talk about today is the cost of NOT becoming a homeowner - that is, deciding to put it off, year after year.
We get that sometimes it's not so much a decision, as unexpected life events dictating a series of moving around, or uncertainty about a new community. Of course all that happens; we've been through it ourselves. In the short term, those are exactly the sorts of circumstances when it IS best to rent. Even so, you are wise to choose a rental that will let you continue to move towards a goal of becoming (or resuming) homeownership.
Once upon a time, renting a modest place was definitely cheaper than owning a typical home. It was reasonable for younger people (for example) to put in some time in smaller, modestly appointed digs and aggressively save towards a down payment, often coinciding with marriage or expanding a family. Sadly, this day is LONG gone. Today, even right here in Kitsap, we have experienced sky high rents, even for very modest spaces. The "Fair Market Rent" in 2021 for even a studio was $976, with the median actual prices coming in around $1047. If you add a couple bedrooms, you'll be closer to $2200!!
You can quickly see why people become very trapped in the renting life - when your rent climbs and climbs, it is difficult to save up towards the closing costs needed to buy a home. It's maddening, because the actual monthly money spent may easily exceed what a homeowner is spending. The (unwilling) renter spends month after month tossing money away instead of building equity and the financial stability of homeowning. It can feel like housing insecurity too, if you struggle to find a cheaper rental when your lease renewal is more than you can afford, yet if you don't agree to the higher amount you'll find yourself competing with other people desperate for a place in a tight rental market, with inflation outpacing average incomes. If you think of a Seattle area renter (where figures are 25 - 50% higher, depending on area) who is considering moving to Kitsap and buying a house, the disparity really shows up.
Every year spent renting compounds the disparity - if you'd have been able to save $500/month without giant lease increases, that would be $6,000/year. Over three years (nevermind the interest, which isn't insubstantial) you'd have amassed $18K, which is a very nice down payment & closing costs for a modest first home.
Here's the thing about modest homes: they are nearly always more spacious - and have private yard space between you and the neighbors - than rental living (unless you've been renting houses . . . in which case, RIP your savings account with current prices!!) They are a worthy place to start investing in real estate as part of your financial soundness and future wealth plan.
People who have not being building equity in a real estate property, don't have that as a source of security for future needs, like additional real estate purchases, business opportunities, and emergencies. People who rent certainly do save money, but they aren't using those savings to also house themselves, which is what you are doing when you pay a mortgage (and build equity) compared to rent.
It's true that most people look at homeownership as putting a roof over their heads, exactly like renters. And that's fair to a certain extent; we all need that. But it becomes clear in a year or two or three in - you will get that latest assessment from the county (a figure used to determine your property tax, not the actual amount you might sell for . . . call your realtor if you'd like a Current Market Analysis - we do them anytime, for free at Dupuis Team!!) and realize that your mortgage has shrunk a bit. Heck, maybe you even decided to refinance with the lower rates and not only are you shrinking the mortgage, you're enjoying a reduced payment. That's when it sinks in that this wasn't just a purchase, it's an ASSET and continues to hold value, unlike nearly every other thing we have to buy in life. You can think of rental money as "consumable housing" but mortgage money as going towards durable goods, your real estate property.
It's really a heavy moment too, when that first year rolls around and you realize you aren't going to get a notice of increased rent. It feels extremely satisfying, like you've done something healthy for your finances. NOT paying a (modest) $100 increase/month in rent, accrues to $1200/year. And that's money you can either save toward your next real estate purchase, or improvements for the place you've got now - and $1200 goes a LONG way! That will redecorate a room, repaint the exterior, put in some serious landscaping, and more.
So while we recognize and support that there are times renting is best, we really encourage people to start building future wealth NOW, by getting into a property as soon as possible. You really are losing compounded money, for every month and year you put it off. Give Dupuis Team a call today, and we'll walk you through what you can expect from the process, and what your expected costs will be.