We’ve all been told that part of the traditional American dream is to own a home. But the reality is that home prices have trended upwards. Unfortunately, this has made it challenging for aspiring homebuyers to get their foot in the door and enter the real estate market.
According to the Federal Reserve’s Report on Economic Well-Being of U.S. Households in 2024 to May 2025, 63% of adults owned their homes, while 28% rented. What’s interesting is that those with higher incomes are more likely to own a home, as those with lower incomes are more likely to rent. What’s more, the median nationally reported monthly rent was $1,200.
Achieving homeownership is a significant life milestone that many people spend years saving for. But it’s really only for those who can afford it. If you’re currently debating whether to rent or buy a home, it can undoubtedly have a lifelong impact on your future lifestyle and finances. Here, we’ll walk through the factors you need to consider when renting versus buying a place.
Considerations For Renting
Whether you’re looking to rent a place on your own or with a roommate, these are some of the pros and cons that you should know about.
Advantages
You don’t need a large sum of money to start renting. So, it makes it easier to find a place to live rather than taking years to save for a large down payment on a home. On top of that, you just typically pay your monthly rent and utilities. You don’t need to worry about having an additional cash reserve for property taxes or mortgage payments, which are costly expenses. In a March 2026 analysis by Realtor.com, renting still makes a lot of sense in all 50 major U.S. metros.
If you don’t want the responsibility of maintaining your home, then renting could be a decent option. If you have experienced a flood or a kitchen appliance needs repair, you can simply contact your landlord, who will take care of these issues (ideally, in a timely manner).
A lot of renters appreciate the flexibility that renting provides. Especially if you plan to move in a few years. It’s common for the tenant and the landlord to agree to a one-year lease. However, each state and municipality have their own laws. Be sure to understand your rights and obligations. If you decide to move three years from now, it’s much easier to end your lease agreement than to prepare to sell your home.
Some people in the Financial Independence/Retire Early (FI/RE) movement prefer to rent rather than buy. That’s because the equity that would have been tied up in the home and maintaining it allows them to invest that money in the stock market. They could invest in, say, the S&P 500 and still grow their net worth.
Disadvantages
The major downside to renting is you aren’t accumulating any equity when you pay rent each month. Rent is an expense and you can’t enjoy any property appreciation.
Every state and local government determines the rent price increase limits. Each year, you may have to pay a higher rent if your landlord chooses to increase it. So, you should factor this into your budget.
Another important aspect is that as a renter, your landlord could sell the home (or move back in) and you may need to find another place to live at any given time. Or if they raise the rent that’s beyond your budget, you may choose to move out. Since you don’t own the property, you have restrictions on how you choose to decorate or make modifications. You typically have to ask the landlord for permission to make any changes.
Lastly, unlike homeowners, as a renter, you aren’t eligible for any tax write-offs. You also don’t receive any tax benefits from monthly housing costs.
Considerations For Buying
If you have the means to make a home purchase or want to plan ahead, these are some of the responsibilities that come with homeownership.
Advantages
There are certain pockets in the United States where housing prices have gone down along with mortgage rates, making it easier for some would-be buyers to consider purchasing a home.
A big upside is that homeowners may also be eligible for tax breaks or government benefits. For example, you could be eligible for a Mortgage Interest Credit or deduct certain house-related expenses when they take out a mortgage.
When you own a home, it provides a path to building wealth. In fact, many millionaires created their wealth through real estate. You own a valuable asset that could appreciate in value over the long term. If you have a mortgage, every time you make a payment, you’re building equity.
As a homeowner, you have the opportunity to use part of your home to earn rental income. For example, if you have a basement apartment, you could rent it out and it could be an additional income stream. This extra cash could help to offset your mortgage payments and maintenance costs.
In my opinion, renting has become more socially acceptable. For millennials and GenZ, they’re delaying getting married, having kids, and buying their first home. So realistically, I can see why young adults would gravitate towards renting instead of buying.
Disadvantages
Once you make the home purchase, there are additional costs (that are often overlooked) that you need to cover. For instance, you need to set aside funds for closing costs, mortgage payments, property taxes, and ongoing maintenance. Plus, homeowners insurance is usually more expensive than renter’s insurance.
Don’t forget that you need to be willing to take care of your home. Otherwise, you may consider hiring a contractor or property manager to maintain it. From mowing the lawn, shoveling the snow, repairing the roof, or conducting home renovations can be very time consuming and labor intensive.
Although you’re building equity in your home, it’s not something you could easily sell (like a stock or bond). Say, if you needed to relocate for a job or to be closer to a family member, selling a home takes time.
There’s no guarantee that your home will go up in value. Going back to the 2008 housing crisis, there was a global economic downturn and caused many foreclosed homes. Keep in mind that if you’re looking to create wealth through home ownership, it should be seen as a long-term investment.
In my personal experience, owning a home gives me a lot of control and has helped me build wealth gradually. However, I find that my maintenance costs and property taxes tend to go up every year. As such, I have a contingency fund for unexpected costs.
Affordable Places To Live
Regardless of whether you decide to rent or buy a home, you’ll also want to consider the states that are budget-friendly. Places like West Virginia, Michigan, Mississippi, Indiana, and Kansas offer affordable rent. These areas could be appealing to families or those with lower household incomes.
However, some smaller cities or towns may have fewer job opportunities or community services. Some rural areas may have less transportation options, so you may have to rely on driving to get around. Given that gas prices have also gone up, you should also factor this into your budget. So, it’s important to find a balance between affordable housing and your ideal lifestyle.
FAQ
Is it better to own or rent in the United States?
For many Americans, it makes more sense to rent (at the time of writing this article). Rent prices have gone down. As such, renting has become more affordable in the near-term. If one has the money saved up to buy a home, it could be a good way to build wealth. However, homeownership comes with extra costs and responsibilities that renters don’t have to worry about.
How do I choose if I should rent or buy?
From a financial perspective, you can use a rent vs. buy calculator. All you have to do is enter your desired location and projected costs. Then it’ll help you determine which option is better suited for your situation. It gives you an easy way to compare your options. It boils down to how long you plan to live in the home, your lifestyle, and if you view your house as an investment.
What are the advantages of renting?
If you plan to move within a few years, or you want an affordable way to live in a starter home, renting could be a viable option. It provides a lot of flexibility, low commitment, and doesn’t require much capital.
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Sources:
- https://www.mpamag.com/us/mortgage-industry/market-updates/renting-vs-buying-which-makes-the-most-sense-for-americans-right-now/572177
- https://www.zillow.com/learn/renting-vs-buying-pros-and-cons/
- https://www.investopedia.com/financial-edge/1112/reasons-renting-is-better-than-buying.aspx
- https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/
- https://www.cnbc.com/2024/08/31/heres-when-it-makes-sense-to-buy-vs-rent.html
- https://www.nerdwallet.com/mortgages/calculators/rent-vs-buy-calculator
- https://www.wealthsimple.com/en-ca/magazine/buy-or-rent
- https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households-in-2024-housing.htm
- https://www.comun.app/en/blog/some-of-the-best-states-to-live-in-the-united-states-affordable-options-with-a-good-quality-of-life
- https://www.realtor.com/research/march-2026-rent
- https://www.realtor.com/mortgage/tools/rent-or-buy-calculator/
- https://www.irs.gov/newsroom/tax-benefits-for-homeowners
