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Since 2020, home prices have skyrocketed, increasing costs for homeowners and renters alike.
But does owning your home instead of renting affect how much you could save?
The Federal Reserves most recentSurvey of Consumer Financessuggests the answer is yes.
Heres how the average renters savings compare to those of the average homeowner.
Also see the cost of renting versus owning a home in each state.
That includes all money in savings, checking, prepaid and money market accounts.
However, the gap between homeowners and renters savings has been growing.
In 1995, on average, homeowners had around twice as much saved as renters.
Now homeowners have five times more in savings than the average renter.
The Cost of Renting vs.
Owning
Perhaps counterintuitively, renting is often less expensive than owning a home.
Currently, the median rental price nationwide is $1,987 per month, perRent.
Thats $148 cheaper per month compared with the median mortgage payment.
The cost difference between renting and owning a home is more extreme in metropolitan areas.
High interest rates are likely driving most of the higher costs of homeownership.
If mortgage rates go down as expected,monthly mortgage paymentswill decrease.
But despite the higher costs, homeowners still save more than renters.
Say you buy a new home with a30-year fixed-rate mortgage.
Your monthly housing costs will be stable for the 30 years of the loan.
After youve paid off your mortgage, youll have to pay only taxes, insurance and maintenance.
However, renters do have to coverrising rental ratesnearly every year.
Since 2019, rent prices have increased by around 19% nationwide.
Rising rent prices can take up larger and larger chunks of renters budgets.
As their housing costs increase, they have less money to put toward savings and other financial goals.
By comparison, homeowners have more of their income to put into savings after paying off their mortgages.
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