Avoid the Rental Trap in 2023

<article class="post-596510 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-596510"><span class="entry-date">January 4, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Avoid the Rental Trap in 2023</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Avoid+the+Rental+Trap+in+2023&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Favoid-the-rental-trap-in-2023%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
<div class="fb-share-button display-inline-block" data-href="https://gilliggroup.com/blog/avoid-the-rental-trap-in-2023/" data-layout="" data-size=""><a class="facebook solid fb-xfbml-parse-ignore" data-tracking="Post,Social Post Link Clicked,Twitter" href="https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fgilliggroup.com%2Fblog%2Favoid-the-rental-trap-in-2023%2F&amp;src=sdkpreparse" target="_blank"><span class="force-hidden">Facebook</span></a></div>
<a class="pinterest solid display-inline-block" count-layout="horizontal" href="https://pinterest.com/pin/create/link/?url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Favoid-the-rental-trap-in-2023%2F&amp;description=Avoid+the+Rental+Trap+in+2023" target="_blank"><span class="force-hidden">Pinterest</span></a>
<a class="linkedin solid display-inline-block" href="https://www.linkedin.com/shareArticle?mini=true&amp;url=https://gilliggroup.com/blog/avoid-the-rental-trap-in-2023/?shareSlug%3Davoid-the-rental-trap-in-2023" target="_blank"><span class="force-hidden">LinkedIn</span></a>
<a class="email dashicons dashicons-email solid display-inline-block" href="mailto:?subject=From gilliggroup.com: Avoid the Rental Trap in 2023&amp;body=Avoid the Rental Trap in 2023%0D%0Dhttps://gilliggroup.com/blog/avoid-the-rental-trap-in-2023/" target="_blank"><span class="force-hidden">Email</span></a>
</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div>If you’re a renter, you likely face an important decision every year: renew your current lease, start a new one, or buy a home. This year is no different. But before you dive too deeply into your options, it helps to understand the true costs of renting moving forward.<!–more–>
<p>In the past year, both current renters and new renters have seen their rent go up based on information from <a href="https://www.realtor.com/research/october-2022-rent/"><em>realtor.com</em></a>:</p>
<blockquote><p><em>“<strong>Three out of four renters (74.2%) who have moved in the past 12 months</strong> reported seeing their rent increase. The strain from recent rent hikes isn’t exclusive to renters who have recently moved. <strong>Nearly two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months</strong>, and likely renewed their lease, have also reported increases in their rent.”</em></p></blockquote>
<p>And if you look back at historical data, that shouldn’t come as surprise. That’s because, according to the <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf"><em>Census</em></a>, rents have been rising fairly consistently since 1988 (<em>see graph below</em>):</p>
<p><a href="https://media.agentaprd.com/sites/222/median-asking-rent-since-1988-MEM.webp?a=712984-fa409495d5d70154d03a25e81e9540e2"><img alt="Avoid the Rental Trap in 2023 | Simplifying The Market" class="aligncenter wp-image-47714" decoding="async" fetchpriority="high" height="488" src="https://media.agentaprd.com/sites/222/median-asking-rent-since-1988-MEM.webp" width="650"/></a></p>
<p>So, if you’re considering renting as an option in 2023, it’s worth weighing whether this trend is likely to continue. The 2023 <a href="https://www.realtor.com/research/2023-national-housing-forecast/"><em>Housing Forecast</em></a> from <em>realtor.com</em> expects rents will keep climbing (s<em>ee graph below</em>):</p>
<p><a href="https://www.simplifyingthemarket.com/wp-content/uploads/2022/12/rent-growth-is-expected-to-continue-MEM.png?a=712984-fa409495d5d70154d03a25e81e9540e2"><img alt="Avoid the Rental Trap in 2023 | Simplifying The Market" class="aligncenter wp-image-47715" decoding="async" height="488" src="https://www.simplifyingthemarket.com/wp-content/uploads/2022/12/rent-growth-is-expected-to-continue-MEM.png" width="650"/></a></p>
<p>That forecast projects rents will increase by 6.3% in the year ahead (<em>shown in green</em>). When compared to the blue bars in the graph, it’s clear that the 2023 projection doesn’t call for an increase as drastic as the ones renters have seen over the past two years, but it’s still above the historical average for rent hikes between 2013-2019.</p>
<p>That means, if you’re planning to rent again this year and you’ve not yet renewed your lease, you may pay more when you do.</p>
<h4><strong>Homeownership Provides an Alternative to Rising Rents</strong></h4>
<p>These rising costs may make you reconsider what other alternatives you have. If you’re looking for more stability, it could be time to prioritize homeownership. One of the many benefits of owning your own home is it provides a stable monthly cost that you can lock in for the duration of your loan. As <em>Freddie Mac</em> <a href="https://myhome.freddiemac.com/blog/homeownership/4-benefits-owning-home">says</a>:</p>
<blockquote><p><em>“<strong>Monthly rent payments may increase over time, but a fixed-rate mortgage will ensure that you’re paying the same amount each month. </strong>With a fixed-rate mortgage, your interest rate is locked in for the life of loan. Steady payments allow you to budget wisely and make plans for the future.”</em></p></blockquote>
<p>If you’re planning to make a move this year, locking in your monthly housing costs for the duration of your loan can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases like you would if you left your housing payment up to your landlord and their renewal cycle.</p>
<p>Homeowners also enjoy the added benefit of <a href="https://www.simplifyingthemarket.com/2022/12/20/homeowners-still-have-positive-equity-gains-over-the-past-12-months/?a=712984-fa409495d5d70154d03a25e81e9540e2">home equity</a>, which has grown substantially. In fact, the latest <a href="https://www.corelogic.com/intelligence/homeowner-equity-insights-q3-2022/"><em>Homeowner Equity Insight</em></a> report from <em>CoreLogic </em>shows the average homeowner gained $34,300 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage on a house, you grow your <a href="https://www.simplifyingthemarket.com/2022/12/08/homeownership-is-an-investment-in-your-future/?a=712984-fa409495d5d70154d03a25e81e9540e2">wealth</a> through the forced savings that is your home equity.</p>
<h3><strong>Bottom Line</strong></h3>
<p>If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s chat to see how you can begin your journey to homeownership today.</p></div>
</div></article>