Owning a home has always been the American Dream. In fact, the rate of American home ownership has always been greater than in most European countries. Historically, the homeownership rate in the U.S. has ranged from 63% to 65%, going back to 1970. It rose to 69% just before the Great Recession, but then in 2015, as homes were foreclosed, it dropped all the way back down to 63%. Still, it remains a dream of most people to own their own home.
There are two main factors to consider when trying to decide whether to buy or rent: how long you will be in a location and what your current financial situation is. You need to own a house at least three years to recover your transaction costs, and you should consider whether you can afford the down payment and the monthly mortgage costs. Also, be sure to check if you would be eligible for tax benefits. You can deduct the annual interest of your mortgage plus local real estate taxes. Generally, young people rent while in college, then rent in a downtown area after they get their first job, and then buy a home after they become a couple (especially if they have children). People under 25 tend to rent, as they are not yet locationally stable and because the mortgage interest tax deduction does not help them much. Between the ages of 25 to 55, people tend to buy. At any age, however, low-income people tend to rent due to economic barriers.