Renters are having a harder time finding affordable rentals, and changes in family size and other life events make it harder to move from one rental to another and still live in a relatively nice place. Renting a one-bedroom apartment costs an average of $1,739 in the United States.

The average rental is much higher in some areas, such as New York City or Los Angeles, and generally more affordable in more rural areas, but the cost is rising everywhere, according to real estate experts like, Patrick Carroll. Many multifamily housing units also have inconsiderate neighbors who play loud music, hold disruptive parties, or engage in criminal activities.

Homebuying Cures Rental Woes

The mortgage costs for homes can be lower than most rental rates, even when adding insurance costs and property taxes. A home also can be expanded within the local zoning laws to make room for a growing family.

It’s best to seek a home that fits your current budget after you have determined where you are most likely to live and work for many years. You’ll need to ensure local zoning ordinances will enable you to modify your home as needed, such as adding a new bedroom or making other improvements over time as required by lifestyle changes.

Average Housing Cost Challenges Potential Buyers

First-time homebuyers need to carefully assess their needs and look for homes that suit them without costing too much. The median home price in the United States was $407,600 in April, which means half of all available homes cost less than that price while the other half cost more than that amount. As always, it pays to shop around to find the best deals.

The cost can vary greatly with urban centers generally costing much more due to higher property values and rural areas costing much less. First-time homebuyers and retirees are best suited for finding affordable housing with one or two bedrooms and one or two bathrooms. A relatively small home on a reasonably sized lot is ideal for many people, and smaller homes generally have lower demand, which makes them more affordable.

Many Options for Mortgage Loans

Most people are aware of traditional mortgages that they can obtain through a bank or a similar mortgage lender. Other options exist that might be a better fit.

A Federal Housing Administration loan is available for people with even poor or fair credit ratings and typically requires a down payment of between 3.5 percent and 10 percent, depending on your credit rating. Another option is the U.S. Department of Agriculture, which offers affordable mortgages to buy rural homes located in communities with less than 35,000 people.

Exploring Alternative Mortgage Programs Veterans and active-duty military personnel can take advantage of VA loans, which often require no down payment and offer competitive interest rates. These loans also typically don’t require private mortgage insurance (PMI), which can save borrowers hundreds of dollars monthly. State-specific programs also exist for first-time homebuyers, often providing down payment assistance or favorable loan terms to qualified residents.

Hidden Costs of Homeownership While mortgage payments might be lower than rent, prospective buyers should factor in additional expenses. Home maintenance typically costs between 1% and 4% of a home’s value annually. This includes routine upkeep, emergency repairs, and replacing aging systems like HVAC units or roofing. Utility costs also tend to be higher for homeowners compared to renters, as they’re responsible for all services rather than having some included in rent.

Building Long-term Wealth Through Real Estate Despite these costs, homeownership remains a primary way to build generational wealth. Each mortgage payment contributes to building equity, unlike rent payments which solely benefit the landlord. Homeowners can also benefit from property appreciation over time, with historical data showing average annual home value increases of 3-5% nationally, though this varies significantly by location and economic conditions.

Strategic Home Buying in Today’s Market Buyers facing high prices might consider:

• Looking at up-and-coming neighborhoods before they gentrify
• Purchasing a fixer-upper and gradually making improvements
• Exploring townhouses or condos as starter homes
• Considering house-hacking strategies, such as renting out extra rooms to offset mortgage costs
• Investigating foreclosed properties or short sales for potential savings

The Rise of Remote Work’s Impact on Housing The increased acceptance of remote work has changed home-buying patterns, allowing many buyers to consider locations they previously couldn’t due to commuting constraints. This shift has led to growing interest in smaller cities and rural areas where housing costs are lower, potentially offering better value for first-time buyers who can work remotely.

Planning for Future Market Changes While housing prices have risen significantly in recent years, market conditions can change. Buyers should consider their long-term plans and ability to weather potential market downturns. Having a fixed-rate mortgage provides payment stability regardless of market conditions, unlike rental rates which typically increase annually.