Renting Is Now More Affordable Than Owning, According to Realtor.com. Here’s Why I Still Recommend Buying a Home

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Renting may be more affordable than owning a home right now, but a house is more than just a place to live. Here’s why you should consider buying. 

Renting is now more affordable than buying a home in all but three metro areas, according to the latest data from Realtor.com. Renting, on average, only costs about $1,750 per month, whereas buying a starter home in August 2023 was almost $3,000 per month. That’s a huge difference. Despite this, I still think it’s important for your financial future that you buy a home when you can.

No, I’m not out of touch with what the real estate market looks like — I regularly monitor housing across the country. I know it’s very grim at the moment for those of you who are just entering or have never been on the property ladder before. It’s downright dark out there.

But buying a house isn’t about this moment, and that’s kind of my point.

You should buy a home — even if renting is easier

I spent many years putting a lot of people into a lot of houses, so you’d be forgiven to believe that I’m a bit prejudiced in this regard. What I learned during that period was something I will never forget as long as I live, and something that continues to prove true: Housing permanence is a massive stabilizer.

According to the U.S. Census Bureau’s 2021 American Housing Survey (AHS), there are over 128 million households in the United States. Of those, 82 million are homeowners; 46 million are renters. In the two years prior to the survey, 35 million of those households had moved. Of those, 14 million were owners, while 21 million were renters. About 60% of the people who moved were renters, which is far from an unusual pattern — rental homes tend to be temporary places to lay your head.

And that’s the problem, really. Here are three reasons why buying a home is better than renting, even if it’s not cheaper.

1. Buying a home creates permanence

When you know how much your house payment will be every month, it’s much easier to plan for anything that might happen. Although your mortgage lender will be the first to tell you that only the principal and interest payments are guaranteed, it’s rare that your taxes or insurance will suddenly grow explosively, unlike rents in a hot market.

Being forced to leave your home because you can’t afford your rent is a tragedy that happens far too often, and it unbalances life for people all across the country. You can’t have financial security without secure housing.

2. Buying a house gives you a sense of community

Buying a house in a neighborhood where other people have bought houses and still own them is a whole experience. It’s not just about investing in real estate (and buying your own personal home should never be considered an investment) — it’s about joining a community you can’t access as a renter.

Homeowners association or not, your neighborhood is a badge of honor, a place to make friends, and a source of unity and security. Even if you don’t live in the premier neighborhood in your area, you and your neighbors are working hard to make the place better every day, and that changes your perspective.

3. Permanence and community help create a solid financial foundation

Which brings me to the third point. Having both permanence and community is how you get a solid financial foundation. Look at the people who have managed to secure their futures. Not the ultra wealthy, but those who are financially comfortable. Those guys (and gals) have a lot in common, including the fact that they own their homes and therefore have both permanence and community.

According to a MassMutual study from 2018, nearly half the people surveyed believed that community involvement improved their finances, and 65% believed it improved their careers. Although many Americans don’t see a direct link between community and financial health, Americans who lack community feel more anxious about their current financial well-being and more anxious about their financial future.

What’s cheaper isn’t always what’s better

Although you may find significant savings in renting right now versus buying that starter home, if you’re in a place where you want to really dig in and start to establish your financial life in a significant way, you need a base of operations from which to do it — and a mortgage.

Simply having control over your housing, and being able to decide what happens to your family today, tomorrow, and into the deep future, frees you from the worry and expense of having to move yet again. It allows you to set down real roots, get active in your community, get to know your neighbors, and really focus on managing your expenses.

Even if you’re paying more on your mortgage today than you would be in rent, it does even out over time. One study showed that from 2017 to 2022, rents have consistently increased by an average of 5.77% year over year, meaning that rents have increased by 5.77% each year since 2017. In those years, your fixed-interest mortgage’s principal and interest payment hasn’t changed at all.

Renting isn’t really cheaper in the long run, as it costs you financial opportunities in a thousand different ways.

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