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You are here: Home / Buying a Home / Move Out of the Rental Trap in 2023

Move Out of the Rental Trap in 2023

January 4, 2023

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.

In the past year, both current renters and new renters have seen their rent go up based on information from realtor.com:

“Three out of four renters (74.2%) who have moved in the past 12 months reported seeing their rent increase. The strain from recent rent hikes isn’t exclusive to renters who have recently moved. Nearly two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months, and likely renewed their lease, have also reported increases in their rent.”

And if you look back at historical data, that shouldn’t come as surprise. That’s because, according to the Census, rents have been rising fairly consistently since 1988 (see graph below):

Avoid the Rental Trap in 2023

So, if you’re considering renting as an option in 2023, it’s worth weighing whether this trend is likely to continue. The 2023 Housing Forecast from realtor.com expects rents will keep climbing (see graph below):

Avoid the Rental Trap in 2023

That forecast projects rents will increase by 6.3% in the year ahead (shown in green). 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.

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.

Homeownership Provides an Alternative to Rising Rents

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 Freddie Mac says:

“Monthly rent payments may increase over time, but a fixed-rate mortgage will ensure that you’re paying the same amount each month. 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.”

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.

Homeowners also enjoy the added benefit of home equity, which has grown substantially. In fact, the latest Homeowner Equity Insight report from CoreLogic 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 wealth through the forced savings that is your home equity.

Bottom Line

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.

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DENVER REAL ESTATE & HOUSING BLOG

scott rodgers realtor blogHi, I'm Scott Rodgers, a native of Denver and a professional Realtor serving the metro Denver metro area. In short, I help people buy and sell homes, and have built a bit of a reputation wearing a kilt to my clients' closings.

Follow this daily blog on the Denver housing market and real estate related topics for highly relevant information for home buyers and sellers.

And should you or someone you know be in the market to buy or sell a home, please reach out to me to discuss what you are looking to do. I adapt to all my clients' needs and strive to provide you with The Peak Results.

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Denver Real Estate Blog

  • You May Not Need as Much as You Think for Your Down Payment [INFOGRAPHIC] February 3, 2023
  • Experts Forecast a Turnaround in the Housing Market in 2023 February 2, 2023
  • Should You Rent Your House or Sell It? February 1, 2023
  • Lower Mortgage Rates Are Bringing Buyers Back to the Market January 31, 2023
  • Where Will You Go If You Sell? You Have Options. January 30, 2023
  • Homeownership Boosts Your Net Worth Through Equity [INFOGRAPHIC] January 27, 2023
  • REcolorado MLS Ranks Scott Rodgers 2022 Top-40 Agent by Residential Sales, Top-5 for Denver County. January 26, 2023
  • Moving Now May Be A Better Option Than This Spring January 26, 2023
  • Why You Shouldn’t Fear Today’s Foreclosure Headlines January 25, 2023
  • The 3 Factors That Affect Home Affordability January 24, 2023

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