Is Renting or Owning More Affordable? In Chicago, Owning Wins Out
Wondering whether it makes more financial sense to buy a single-family home or condominium in Chicago than it does to rent an apartment here? A recent feature story by REALTOR(R) Magazine should ease your concerns.
The story cites data from financial website SmartAsset.com listing those U.S. cities that have seen the biggest increases in apartment rents. According to the story, Chicago ranks third, with the average fair-market apartment rent rising from $1,475 a month in 2013 to $1,956 in 2016. That’s a jump of 37.6 percent.
The rent on a typical Chicago apartment, then, consumes 44.3 percent of the median household income for the Chicago area. That’s a jump from 2013, when this rent ate up 37.6 percent of the area’s median household income.
Chicago only trailed top-finisher New Orleans and second-place finisher Cleveland on SmartAsset’s list.
The REALTOR(R) Magazine story also said that nearly half of all renters in the United States — 46 percent — spend more than 30 percent of their incomes on their monthly rent. That is what economists consider “cost-burdened,” meaning that these consumers are spending too great of a percentage of their incomes on apartment rent.
It’s true, too, that owning a home in Chicago has gotten more expensive, too. Housing prices have risen on month-over-month basis for more than five years straight now. However, owning still ranks as a more affordable proposition today than does renting. And owning comes with certain economic benefits that renters don’t get.
For instance, owners can deduct the interest they pay on their mortgage loans on their taxes each year. Owners can also build up equity in their homes as their residences gain in value and as they pay off their mortgage loans. They can then tap this equity in the form of home equity loans or lines of credit to pay for everything from a child’s college education to a massive pay-off of their credit-card debt.
The smart choice, then? In Chicago, it’s often buying instead of renting.