The Preference for Renting a Home vs. Buying a Home and its Long-Term Effects

The Preference for Renting a Home vs. Buying a Home and its Long-Term Effects
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Homeownership comes with a huge financial burden and regular maintenance making it an expensive venture for many individuals. The financial implication of buying a home leaves many to opt for renting. The economic and financial hard times, the high cost of living and other obligations foster the inability to acquire or even qualify to buy a house. Moreover, the risk of losing out in case of resale is high.
Renting allows one to shortly live in areas impossible to own a home. The short-term commitments between the tenant and landlord facilitate the urge to rent and have minimal responsibilities than buying one. Renting stands out as a risk-sharing entity unlike owning a home. Employment and constant mobility associated with it discourages people to commit to a long-term endeavor or lease. Essentially, one cannot buy homes everywhere s/he relocates to. In most cases, finances may not allow. Renting becomes a flexible mode of having a home (Brett & Schmitz, 2015).
Renting allows for more savings, unlike home buying where loans take up any extra penny. With savings, individuals are able to invest in other profitable projects. Also, insurance payments and mortgage payment accrue a lot of interest that would be utilized in other ventures. Homeownership entails a steady flow of income to finance the loans which may not be the case for everyone. Thus, there is a huge responsibility that comes with home buyingCITATION InC17 \l 1033 (InCharge, 2017). Preferably, one needs to invest in diversified portfolios than using up savings on one leveraged investment. In addition, fluctuations in interest rates in the money market pose a risk on home equity financing. Therefore, financial and fiscal policies associated with real estate and construction of different countries also affect the rate of homeownership.
Despite the benefits associated with renting, several shortcomings arise, especially in the long-term. For instance, owning a home is a social security for life. It can be a source of income too if leased. However, renting stipulates that without income or at retirement, one may succumb to the streets or government handouts. In the current real estate market, homeownership is a lifestyle (Brett & Schmitz, 2015). Owning a home has been attributed to the rich. Unfortunately, the wealthy constitute a small portion of the entire population.
The continual increment in renting also implies a decline in the real estate sector. Buying a home is an investment, without investors, the industry will collapse. Unfortunately, the value of land is on the rise. However, with few people interested in home buying the demand for rental houses will continue to rise making its supply wanting. On the other hand, uncertainty characterizes renting a home. Landlords may terminate the tenure or escalate rental fees creating home insecurity CITATION InC17 \l 1033 (InCharge, 2017). The effects allied to such aspects have psychological and ...