Part of the American dream is to own a home. Unfortunately, the dream can quickly turn to a nightmare if a person invests in a “money pit.” Whether new to the area or a long-time resident of Pittsburgh, many wonder if they should rent or buy their abode. Those who want to build wealth and give their credit score a significant boost should take on the role of a homeowner. However, it all comes down to lifestyle and finances.
Pittsburgh is Rental Territory
A recent study was conducted that looked at 23 cities across America. Pittsburgh was one of the 16 that fell into what was called rent territory. Being in “rent territory” means that renting is wiser and will help with wealth creation. Though the entire country has shifted to ownership territory, it wasn’t always this way. Back in 1999, the rental market was booming. People who wanted to make long term commitments by purchasing a home, however, plummeted.
Home Ownership Demands Drive Prices Up
The demand for ownership has decreased in some major cities throughout the United States. Places like Atlanta, Houston, Kansas City, and Miami have all seen a decrease in home sales and an increase in rentals. As more people look to rentals for their housing needs, it puts pressure on the housing prices to decrease. Part of the reason why rentals are up in some areas is that prices hit all-time highs and the inventory selection was low.
During the first part of 2018, homes on the market in the Pittsburgh area took an eight percent increase in price. Additionally, there was a ten percent increase in home volume sales. The cost of a home has a significant impact on shifting a market from a renting territory to an ownership one. If homes are affordable, then many people want to invest in something that they can own. However, if the home prices are inflated, many feel that renting is a great way to save money before making such a commitment as homeownership.
The Final Decision
As with any area, the decision to rent or own in Pittsburgh often comes down to financial comforts for each individual person. For some, it’s more attractive to have a landlord pay for repairs, taxes and insurance, while also avoiding the large initial down payment. Others are ready to make the financial commitment to have a place that’s all their own.
A financial advisor or real estate professional can be a great resource for people who are on the fence between renting and owning.
I originally discussed this topic at JasonCohenPittsburgh.org.