Why Buying in the Phoenix Housing Market Makes More Sense than Renting

If there is anything to learn from the last two years, it is that the unexpected should be expected when it comes to this phoenix housing market. That being said, while home prices may have gotten slightly higher over the last year, the consensus still remains that people benefit more from buying property over renting property. 

Here are a few reason why: 

Unsustainable Rent Increases 

Through a combination of factors, over the last three years, it comes as no surprise that the pandemic has played a major role in affecting rental and home prices. From factors like a lower supply of new construction, decrease in homebuyers from price gouging in the market, to even rental moratoriums that have significantly affected rental property owners resulting in a massive 12% average increase in the national rent. It’s no wonder why so many people are struggling to decide on what home to invest in next. 

In one Arizona report alone, there was an average of 46% increase in rent in the Phoenix housing market, just in the last year. This goes to show that rental properties are really unpredictable and incredibly frustrating to plan financially, as the annual increase is inconsistent. That being said, while the real estate market seems to be coming back to a sense of normalcy after a wild ride of a year, it may be the perfect opportunity to start the process of building one's wealth. 

Buying Builds Equity

With buying property you not only get the opportunity to change the design and feel of your home without having to ask for permission from landlords, but you also have the benefit of building equity on that property. Equity is the difference in what you paid into our property from the mortgage, or cost of the property, that you can use to your advantage over time. Equity can then be transferred or leveraged for other things like adding addition to the back of the house, or perhaps buying other properties to use as long term investments. Meanwhile renting, while convenient in the short term, is very costly without building personal wealth through equity. 

Your Asset Can Be Passed Down 

On the topic of building one's wealth, having an asset like a home is very beneficial for the long term as it not only is a necessary investment in your life, but also an appreciating asset that loved ones can benefit from too. And this doesn’t just mean the summer barbecues and memories of the grandkids playing in front of the fireplace over the holiday season; but more so for the younger generations to access the asset in the future, to set them up for financial success too. Maybe you want to pass it down to your children or a sibling to not have to worry about the unpredicted real estate or phoenix housing market for the future. 

When you rent, you give away your hard earned money for the property owner to benefit from. There is very little wealth building in this way, versus investing in yourself with a property has a high likelihood of a return on the investment.