The Real Estate AF Blog

5 myths about homeownership in 2023 that keep you in the rent trap

As one of the top real estate teams in our area, we talk to a lot of folks from all different walks of life, income levels and backgrounds. We hear tons of myths and theories that just don’t reflect the reality of home buying in 2023. So, I’ve put together the top 5 that keep folks wasting their money in the rent trap month after month.

Myth Number 1. I need to save 20% down.

No, you absolutely do not. There are plenty of low down or zero down options for buyers in 2023. The only people putting 20% down are those who have built equity in another property. Despite what your parents or grandparents might tell you, 20% down is not how it’s typically done today. You can’t save faster than appreciation swells property prices and you’re bleeding out cash on rent while you’re trying. *see the math below

Myth Number 2. I don’t have the credit / I’m working on my credit.

Let’s be honest here, you aren’t a credit expert and you don’t know what your home buying credit profile looks like, despite what the app on your phone or your bank provided FICO score might say. The truth is that there are three major credit bureaus and a lender will be inquiring with each of them along with several other factors to determine what your usable credit score is in actuality. As far as “working on your credit” goes, good for you, that is the right thing to do, but do you really know what actions are best? Did you know that paying off all of your debts can actually make your credit score go down? No? You need to let the professionals take a look at your situation and pinpoint the best actions to take and the best things to leave alone. This can and should happen well in advance of you being “ready to buy”. The fact is, everyone we consult with tells us what their credit looks like and none of them are actually fully correct. Let us take a look and guide you or we’ll be in the same place, having the same conversation 2 years from now. *see the math below

Myth Number 3. I’ll be stuck in a mortgage for 30 years.

What kind of nonsense is this?! We hear it ALL THE TIME. Have you ever heard of selling? Your instinct here might be to say something like “What if the market crashes?”... I’m giving an unabashed eye roll here. There are so many reasons that this is an unfounded, irrational fear, but being sensitive and all… In the unlikely event that you can’t sell your house for more than you owe when the time comes that you want or need to move, you can put a renter in there until the value is where we need it. Another lessor option, if the situation is right, we can do a short sale. Seriously, this is a waste of time discussing any further. *see the math below

Myth Number 4. I need to wait until I can buy my dream home.

NO! That isn’t a path to success anymore. That is a path to perpetual rent hikes, disappointment and the attainability of the dream getting further and further away. Think of the housing market like an ocean that’s always rising. Until you buy something, you’re anchored to the bottom. The path to the dream house (we’ll call it a yacht for this analogy) is to first buy the “Dingy” or whatever “boat” you can afford, so you can rise with the ocean and then trade up to the yacht. Simply put, buying something now will allow you to put a portion of your housing dollars (that you’re going to spend anyway) back into your pocket and take advantage of appreciation of the home as the market increases. Then you can sell it and use your equity to buy what you really want. Listen up! The alternative is… well… *see the math below

Myth Number 5. It’s cheaper to rent.

Who are you kidding? Renting effing sucks! Not only is it not cheaper to rent in Washington State than it is to buy, but by renting you’re losing money in multiple ways. I’m just going to let the math speak for itself below… regardless of if you’re trying to save up, the waste on rent and equity loss still applies. *see the math below

*I could write a top 5 list as to the reasons folks think that saving 20% down is wise or necessary, but let me just spoil the ending right here… they’re all bullshit. 

Now onto the hypothetical math as promised: 

House Today - $400,000.00 @ 20% down is $80,000

Your Current Rent - $1800/mo or $21,600/yr

Your Savings Capacity - $1000/mo or $12,000/yr

It will take 6.5 years to save $80,000 down, but now the same house that was $400,000 has appreciated to $585,000 so now you need $117,000 down, so back to saving for another three years but you’ll have to increase the amount you save because the house will have appreciated up to $735,000 by the end of year 9.

So, it took you 9+ years to save 20% down. In that time, your monthly rent has increased by $50 to $100 each year, but even if it hadn’t, you’ve given $195,000 or more to your landlord, lost out on $335,000 of appreciated value and lost out on the portion of your mortgage that would have paid down your principal… in other words, you lost a shit ton of money and you’re still living in a crappy apartment, under your landlord’s thumb.

Written by: Jeryd Smith, Founder of WA Home Hunt and a real estate broker, licensed in Washington State. Lic#109593

Is he an idiot or a genius? Who knows, but he is opinionated and that's just what this writing is… his opinion. Nothing more, nothing less.