A lot of people think of home ownership as more expensive than renting. And it is true that you spend more money on fixing things around a home you own than when you are renting. However, that ends up being much less expensive than the money you save if you keep your home for 20+ years.
How is that? When you are renting, landlords often increase the rent 3-6% per year. In San Diego, rents have increased 3% in just the last 6 months according to Rent Jungle. Three percent is a $30 increase on a $1000 rent or $90 on a $3000 rent. Neither sound like a very big increase. However, that adds up over time.
Let’s take the example of a $2000 rent and a 5% increase. In the first year, that is $100… it’s significant, but not huge. In 10 years, your monthly rent would be $3,103. That would be an additional $1,103 per month or $13,236 per year. Even at 3%, it’s an extra $610 per month or $7,320 per year. The numbers get even bigger if you look out 20-30 years.
By buying and keeping a home, you hedge inflation that would come from renting (and you build up equity). You can see an interview I did on Smarter San Diego talking about how you can afford to buy a home and hedge against inflation.
So if you are a homeowner, congratulations! If you are not, think about the long-term savings and let us know if we can be of any assistance in helping you buy a home. It really is a big savings over time!