Southport Oak Island Realty Group, Inc

Wondering If It Is It Better To Rent Than Buy a Home Right Now?

Have you seen reports in the news recently saying it’s more affordable to rent right now than it is to buy a home in Oak Island NC or Southport NC? This may prove to be true in some markets if you just look at typical monthly payments in the Southport and Oak Island North Carolina real estate market, there’s one thing that the numbers aren’t factoring in: and that’s home equity. We at Southport Oak Island Realty Group on Oak Island North Carolina want you to look at how big of an impact equity can have and help you to understand why it’s worth considering as you make your decision.

What the Headlines in North Carolina Real Estate Are Based on

The graph below uses national data on the median rental payment from Realtor.com and median mortgage payment from the National Association of Realtors (NAR) to compare the two options. As the graph shows, especially if you’re not looking for a lot of square footage for your rental home, it can be more affordable on a monthly basis to rent:

But if you’re looking for something with 2 bedrooms or more, the gap between the median rent and the median mortgage payment starts to shrink to a difference that may be more doable. The median monthly mortgage payment is $2,040. The median monthly rent for 2 bedrooms is $1,889. That’s a difference of only about $151 a month. But what some in Oak Island NC are missing is what happens when you factor in equity too.

How House Equity Changes the Game in Oak Island North Carolina

If you rent near the coast in North Carolina, your monthly rental payments only go toward covering your housing costs and your landlord’s expenses. So other than saving a slight bit more per month and maybe getting your rental deposit back when you move, the money you spent on housing each month is gone – forever.

When you buy a house, your monthly mortgage payment pays for your shelter, but it also acts as an investment. That investment grows in the form of equity as you make your mortgage payment each month and slowly payoff what you owe on your home loan. Your equity in your house gets an extra boost as home values climb – which they typically do.

To give you a clearer idea of how home equity in Southport NC and Oak Island NC can really stack up fast, here’s some data for you. Each quarter, Fannie Mae and Pulsenomics publish the results of the Home Price Expectations Survey (HPES). It asks more than 100 economists, real estate professionals, and investment and market strategists what they think will happen with home prices. In the latest release, those experts say home prices are going to keep going up over the next five years.

Here’s an example of how equity builds in North Carolina based on the projections from the HPES (see graph below):

Imagine you purchased a home in Southport North Carolina for $400,000 at the start of this year. Chances are, since you bought, you plan to stay put for a while. Based on the HPES projections, if you live there for 5 years, you could end up gaining over $83,000 in household wealth as your home grows in value.

Here’s how that stacks up compared to renting in North Carolina, using the overall median rent from above:

While you may save a bit on your monthly payments if you rent right now, you’ll also miss out on gaining quite a bit of equity.

So, what’s the big takeaway regarding renting or buying a home in Oak Island North Carolina? Whether it makes more sense to rent or buy in North Carolina is going to vary based on your personal finances. It’s not a good idea to buy if the numbers truly don’t work for you. But, if you’re ready and able, adding equity as the final puzzle piece may be enough to help you realize buying a house in Oak Island, Southport, or Bolivia North Carolina is a better move in the long run.

When it comes down to it, buying a home in Oak Island, Southport or Bolivia NC gives you a benefit renting just can’t provide – and that’s the chance to gain equity. If you want to take advantage of long-term home price appreciation, let’s go over your options.

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Jon Langley

Hi! Nice to 'meet' you and thanks for visiting our Southport and Oak Island Real Estate Blog! My name is Jon Langley, and I'm a REALTOR® in Brunswick County, NC. I work alongside some of the best Realtors in the Southport & Oak Island area. I'd love to learn more about you if you'd like to connect with me on Facebook and Instagram or connect with our team at Southport Oak Island Realty Group. Looking forward to connecting!

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