Are you one of the many renters thinking about where youll live the next time your lease is up? Before you decide whether to look for a new house or another apartment, its important to understand the true costs of renting in 2022.
As a renter, you should know rents have been rising since 1988 (see graph below):
In 2021, rents grew dramatically. According to ApartmentList.com, since January 2021:
. . . the national median rent has increased by a staggering 17.8 percent. To put that in context, rent growth from January to November averaged just 2.6 percent in the pre-pandemic years from 2017-2019.
That increase in 2021 was far greater than the typical rent increases weve seen in recent years. In other words rents are rising fast. And the 2022 National Housing Forecast from realtor.com projects prices for vacant units will continue to increase this year:
In 2022, we expect this trend will continue and fuel rent growth. At a national level, we forecast rent growth of 7.1% in the next 12 months, somewhat ahead of home price growth . . .
That means, if youre planning to move into a different rental this year, youll likely pay far more than you have in years past.
Homeownership Provides an Alternative to Rising Rents
If youre a renter facing rising rental costs, you might wonder what alternatives you have. If so, consider homeownership. One of the many benefits of homeownership is it provides a stable monthly cost you can lock in for the duration of your loan.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
. . . fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.
If youre planning to make a move this year, locking in your monthly housing costs for 15-30 years can be a major benefit. Youll avoid wondering if youll need to adjust your budget to account for annual increases.
Homeowners also enjoy the added benefit of home equity, which has grown substantially right now. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $56,700 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage, you grow your wealth through the forced savings that is your home equity.
Bottom Line
If youre thinking of renting this year, its important to keep in mind the true costs youll face. Lets connect so you can see how you can begin your journey to homeownership today.
