For decades, owning a home was the cornerstone of the American dream. But in 2020 this dream, it seems, is fading for many Americans. This writes Fox Business.
Recent housing crisis is still the focus of potential buyers, and problems in the economy due to the coronavirus not add optimism.
The reluctance to enter the housing market is justified. Buying a home usually is the largest transaction that commits most of the people in my life.
In the face of rising housing prices and the high cost of homeownership, more and more people are questioning the validity of the purchase of the house in General.
To avoid the negative risks associated with homeownership, rental house quickly became the preferred alternative.
5 reasons why renting a house is better than buying in 2020.
In the modern economy is flexibility worth it in the first place. Change of workplace can contribute to long-term earnings and professional development.
Geographic flexibility is important to use these opportunities. Given that the average American worker in the course of his career changed his place of work about 12 times and this figure continues to grow — the short-term nature of rental housing has become the new norm in the United States.
Flexibility remains at the forefront of financial solutions for those who want to optimize their career growth and therefore, short-term lease liabilities are a good choice.
2. The debt continues to grow
Americans have problems with debt.
According to a study by Northwest Mutual Planning & Progress, the average adult American has a personal debt of $30 000, excluding mortgages. The debt is a mixture of student loans, debts on credit cards and other consumer debt.
In this regard, the Americans are forced to make large monthly payments to ease its debt load, leaving little room for savings, emergency Fund or investments.
Almost 70% of Americans have savings less than $1 000.
Focusing on meeting their immediate financial commitments leave people with little time to plan its economic future, including the accumulation of the first payment on the mortgage.
3. Advance payments remain an obstacle
The housing market in the USA is becoming more expensive — the average price of housing reached a record high in 2019.
As a result, the growth of consumers is becoming increasingly difficult to save enough capital for a traditional 20% down payment on the mortgage. This standard the barrier to entry to the housing market in the US, it seems, is constantly growing.
Buyers require about 7 years to save enough money for a 20% down payment. In conditions of stagnant wage growth potential home buyers are forced to postpone the purchase.
4. Urbanization is expensive
Over the past few decades there was a return to urbanization. Large cities such as new York, San Francisco, Los Angeles and Chicago, attracted many employees seeking paid work. As a result of this influx of housing prices and cost of living in these cities continue to grow.
Because of higher property taxes, down payments, and ever-growing living costs, many people think that buying a house is unprofitable.
5. The concept of financial success has changed
A new definition of financial success has gripped American culture, especially for entrants to the housing market. Previous picture country house with a white picket fence as an indicator of economic success, not really resonates with contemporary culture.
Although people want to eventually own a home, they do not consider home ownership a symbol of status and financial success. Instead, they pay more attention to lifestyle, early retirement and other purposes.
A new definition of financial success means a different set of priorities.