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The Value of Homeownership vs Renting

Writer's picture: Josh SurverJosh Surver

Updated: Dec 21, 2024

Why do people buy a home?


Besides the emotional reasons that people buy homes, like achieving the American Dream or joining the seemingly exclusive club that feels out of reach for so many, there are many good, logical reasons to buy a home if you can afford one...


  1. Appreciation. Do you know someone who bought right at the beginning of the COVID madness and now owns something worth double what they paid just 3-4 years ago? One of the massive benefits of owning a home is the potential for appreciation. According to the National Association of Realtors, the median price of a home in the US has increased by 4.24% on average between 1990-2021 (https://www.nar.realtor/sites/default/files/documents/economists-outlook-median-single-family-home-prices-1990-2021-trends-across-the-10-largest-msas-08-05-2022.pdf)


  1. Debt Pay-Down. Another great reason to buy a home is that, unlike renting, buying a home allows you to pocket part of your monthly payment as equity. And over time, the portion of your payment that goes toward your equity, or principle, increases according to an amortization table. Here's an example of a very simplified amortization table:


  1. Tax Benefits. There are many strategies you can employ to reduce your tax burden if you own a home. While I recommend you consult a CPA about the tax breaks that are best for you, some common ones to consider are deducting mortgage interest, home office expenses, and utilities if you drive an electric vehicle for work and use a portion of your home's electricity to charge the vehicle.


  1. Savings. Did you know that homeowners are 40x wealthier than renters on average? According to a NAR-produced report in 2023, owning a home can be one of the best ways to build and store wealth (https://www.nar.realtor/magazine/real-estate-news/study-homeowner-wealth-is-40-times-higher-than-renters). Even if buying a home costs more on a monthly basis than renting, for now, it's like a forced savings plan that will pay dividends in the quantity of your wealth down the road.


  1. Fixed housing expense. Renters know that they have no control over their housing expense. While you might start off paying less per month than a mortgage might cost, depending on the rates, you have no control over what your landlord will charge next year or the year after that. While some cities cap rent increases, that only creates a supply shortage, meaning you have to compete with more renters for the same lease. And what happens 30 years down the road? The homeowner will probably have refinanced to a lower rate somewhere along the way, reducing their monthly housing expense while the renter's monthly expense will have gone up every year for 30 years, reaching 2-3 times the monthly cost over time.


  1. Freedom. You can do whatever you want with your house! You can drill things into the wall without worry of losing your security deposit, paint the walls without anyone's permission, and landscape to your heart's delight. Owning your own home gives peace of mind that you can do what you want with your space without someone telling you to change things back.


  1. Stability. If you're planning on staying somewhere for awhile, it's probably a good idea to buy your own home. You don't want your situation to be forced by a landlord's situation. If that landlord was a military family who just finished up their overseas tour and are retiring to the home they're renting temporarily to you, you're going to have to up and move to allow them back into their home. Leases are only good for their term, which means if a landlord has a legitimate reason to kick you out, they can. Don't put your family's stability in someone else's hands.


Overall, there are many reasons to buy a home - some of them emotional and many logical. If you think buying a home is too complicated or expensive or out-of-reach for you, we can address those challenges in future blog posts... but for now, I hope I've been able to shed light on some important considerations in the decision to buy vs rent.

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