A recent analysis of apartment listing data and statistics from the Census Bureau shows that rental prices are increasing. If you are weighing your options between renting and building a custom home, consider these facts in your comparison:
- Rents have been increasing 0.4% to 0.5% every month in 2017.
- Year-over-year growth is currently 2.9%
- The current inflation rate is 1.6% (1.3% lower than rental increases).
- Rent is up in 92 of the 100 largest cities, including Seattle, Tacoma, and Boise.
It’s also worth noting that Washington State has the second-highest rental increases since this time last year at an average growth rate of 5.5%. Although it’s difficult to predict how long this pattern will hold, if you are making a decision in the near future, the increasing rental rates should be a major factor.
Price Predictability Is No Problem
Although rental prices tend to level out in the fall and spring, they will pick up again at the turn of the new year and continue to increase through next summer. If your situation allows, you can plan your rental agreement around this pattern, but you never know when prices will spike. Even after signing a lease, your rent will likely increase from year to year, and if you decide to move in a year or two, the rental rates could be even higher.
When building a new home, no matter which way the market turns, you have the option to make your monthly expenses predictable with a fixed mortgage. If the economy continues to improve, the value of your home will increase, and you can make money on your investment. You will also have a long-term asset to leverage as needed. If price predictability is a concern for you, owning a new home that requires little maintenance is a smart path forward.
You Can Always Get What You Want
If you have recently looked into renting a house, you know that there are always sacrifices when making a selection. You might not be able to rent in the neighborhood you desire because of availability or affordability. The house or apartment might not have all the features your family wants and needs. The style of the home might not match your tastes. Whatever the compromise is, you will definitely be making at least one of them when you rent.
Building a custom home allows you to decide which features to include, the layout of the floor plan, the paint colors, and the level of finishes. Even if your budget doesn’t allow you to get every single thing you want, you are the one who gets to decide what to prioritize and what can wait until the funds are available.
Build It Yourself for Housing Security
The same rental analysis above determined that most cities are not supplying enough new housing to keep pace with job growth. This is one factor that is driving rents up, but it also means that you might not be able to find an affordable place to live if you are moving to a new area or looking to upgrade your housing situation by renting.
By building a custom home, your housing decisions don’t have to be influenced by the volatile rental market, and you are not contributing to or participating in the growing rental crisis that is occurring in many areas. Owning your own home also protects you from eviction, increasing rental rates, and poor property management.
Build Equity and Increase Assets
Another reason many people decide to buy instead of rent is to build equity and increase assets. Building a custom home allows you to build instant equity, especially if you participate heavily in the construction process. The more work you can organize or do yourself, the more equity you will have right away. This is valuable in terms of the resale price and also increases the assets in your financial portfolio.
Renting might seem like an easier solution, and for many people, it is, but if one of your goals is to build assets over time, the sooner you build, the more equity you will have.
If you are considering building a custom home, get in touch with Adair Homes to discuss what you can get for your budget. We can also help you find land and secure financing, so even if you are in the early stages of making a decision, we are a valuable resource.
