Is It Better to Rent or Buy?

July 11, 2023

The New York Times published a page on renting vs. buying, noting that paying less than $884 monthly might be smarter than buying. But is the rent or buy question answerable with one price and one scenario?

Rent or Buy? It Depends on You

The borrower who prizes a lower monthly payment over long-term housing security (in terms of leases expiring and rents going up) may decide that renting is more advantageous. The ability to break a lease and relocate if needed are two perks of renting you don’t get with owning.

But what about those with different priorities? The rent versus buying question gets more complicated when considering long-term financial goals versus short-term financial advantages.

Buying Costs More, but Delivers More

For some borrowers, the ability to own property, watch it increase in value when the markets are right, and borrow or refinance against the property later are more important than other concerns.

For these consumers, housing security is often the bigger priority. For others, it might be the ability to keep the property and use it later on as an investment property. Some owners may want the home so they can leave it to their children after they pass away.

These people do not want to face increasing rents, unreasonable landlord issues where applicable, or deal with the inconveniences of apartment living in terms of not being able to customize the home, apartment complex neighbors who aren’t as considerate as they should be, or other related problems.

Owning a home means the lack of a lease, possible rent increases, and ever-changing neighbors. Owning a home also gives you more borrowing power as you pay your mortgage over time. You don’t get that from renting.

Your Long-Term Plans Count

A recent college graduate who doesn’t know where they want to settle might do themselves a disservice by buying property too early; someone who is farther along in their career and ready to settle in a certain area does better to consider buying.

If you anticipate a change in family size, you can still consider buying a home, but it’s smart to get one you can grow into and not out of. Those who are single and don’t anticipate a family may have different concerns, but you can see that much of the rent or buy question boils down to personal choices like these.

Renting makes more sense if there is more uncertainty in your life. Buying makes more sense when there is growing stability in your life.

Some buyers don’t have the option to wait to buy a home; they need housing security now. The FHA loan program offers low down payment options and the ability to finance certain closing costs that can help new borrowers better afford a home loan if they qualify.

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