Buy or rent housing: Which is better?

Mark (Buy)

Choosing to own a home is a tricky decision to make. There are a tremendous number of variables that go into making the leap from renting to buying. But ownership has a myriad of benefits that don’t apply to renters. For instance, as long as the home is purchased during the right economic state, buying can be a solid investment. Though some suggest never to purchase during a downturn—even if it’s cheap, you can’t be sure if the market will bounce back. Homeownership is an investment, not a gamble. Homeowner hopefuls should buy only when the time is right for them.

Mortgages are often set at a fixed rate. Rental rates are often raised quarterly/annually by the leasing company. Having a 30-year fixed-rate mortgage offers security through financial planning. It’s easier to budget when big bills don’t fluctuate. Plus, money paid into a mortgage increases the home’s equity, which not only directly affects the home’s value but also allows owners to use that accrued money for future financial ventures. Renters pay a landlord and never see that money again. Consistent mortgage payments improve an owner’s credit history, whereas a landlord can withhold that information to credit bureaus.

Homeowners have complete command over their domain, and home maintenance adds a sense of pride and responsibility for homeowners, who have the freedom to add improvements - major or minor - to boost the value. Bottom line: homeownership gives you the power to plan and execute, and even improve, your quality of life. Renting makes you beholden to someone you may never meet.

William (Rent)

Ah, the real million-dollar question—should people buy or rent? Like many questions, most of the decision is up to the individual, specifically their finances, career, and desire to permanently or temporarily live in a neighborhood.

However, with the modern economy, renting might prove to be quite the enticing plan. Renting allows you to have flexibility. If someone just broke-up, it’s easy to downgrade, and if a couple is just married, it’s easy to upgrade. With no long-term consequences, people have the freedom to simply move around different neighborhoods, cities, and even countries to match their needs. There’s less of an emotional connection when renting versus having to move from a home you’ve sunk money in to. Renting won’t be a financial burden as much as buying. Sure, some areas have drastically high housing markets, but even then, renting comes out to be cheaper in the short-term. 

If you have any outstanding debts, like credit debts or student loans, it might be best to not add upon it with a mortgage. Renting is a more independent approach especially for people just starting off their careers and investments. In fact, the old adage of “buy when the time is right” goes hand-in-hand with the ability to rent. The short time spans you spend renting can really help you buy when markets are cheap or when a neighborhood is just developing. 

In the modern world, a house can be more than just a roof over your head; it can be one of your most significant investments if done correctly. So why take the risk, just rent!