Renting vs Buying a Home in Today's Market
Jun 12 2026
For generations the conventional wisdom has been buying a home is smarter than renting. It's been part of the American dream to settle down, buy a house, raise a family and build equity in your home over a lifetime. However, in today's economy and American lifestyle, renting is more advantageous for many Americans.
Let’s look at the pros and cons of renting or buying, which is typically one of the biggest financial decisions most Americans make in their adult lives.
One Study that Turned Old Housing Beliefs Upside Down
A recent report from Hunter Housing Economics directly compared renting vs. buying a home in the Southeastern U.S. for a typical couple. In this report, a financial advisor laid out the pros, cons and financial impact of each option.
The report compared the costs and savings of buying a $356,500 home with a 5% downpayment vs. renting with an average monthly rent of $2,219.
The financial plan showed that if the couple were to buy the home, the couple would spend $67,100 in the first year and $413,412 over the first 10 years of homeownership. This includes their mortgage, insurance, maintenance and property taxes.
The plan also laid out that renting would cost the couple $29,590 in the first year and $300,454 over the first 10 years of renting, assuming 10% rental increases and 5% insurance increases each year.
Given these numbers, the first year benefit of renting is that the couples out of pocket expense for renting is less than half what it would be to buy a home. And over the 10 years, the couple would spend $112,958 less by renting vs. buying. These are huge out of pocket savings.
Taking this one step further, if the couple were to invest the money they saved renting and averaged a 10.9% annual return, the savings would grow to almost $220,000 after paying long-term capital gains.
This is a compelling case for renting over buying. But it does not account for the long term opportunity-cost of home value appreciation in today's housing market.
Home Appreciation and Intangible Benefits of Home Ownership
The Hunter Housing Economics report really does not "paint the full picture". Not only does it not account for long term appreciation, the S&P may not yield 10.9% annual returns, reducing the long term value of investing the money saved by renting instead of buying.
The report also fails to account for non-financial benefits of owning a home. Homeowners have a sense of security and personal satisfaction that comes from knowing that their home is their own. Home improvements and changes can be made to fit personal style and create long term value.
So, while the report makes a clear and compelling case to rent vs. buy in today's market, the decision is not "cut and dry". And there are other factors to consider:
Tax Benefits of Home Ownership
Home ownership comes with certain tax benefits, including the ability to deduct your property taxes of up to $40,000 and mortgage interest payments on debt up to $750,000 for home loans taken out after December 15, 2017. And as of 2025, American taxpayers have increased deduction opportunities for State and Local Taxes (SALT) on home ownership, providing more compelling financial benefit for homeownership vs. renting.
NOTE: These deductions only apply if you itemize taxes, so you’ll want to work with a tax professional to determine if itemizing is worthwhile for your situation.
Break-even Depends on Where You Live
Zillow recently published analysis that shows in the short term renting is cheaper than buying in almost all situations.
The break even point on renting vs. buying depends on where you choose to live. The Zillow report says that, in general, that after 6 years a U.S. buyer/renter would spend the same amount of money renting vs buying. A six year break even. However, the number changes significantly by geography. In cities in the Midwest and South, homebuyers can break even in as little as 4 years. But in markets like San Francisco it's near impossible for a home buyer to break even because housing prices and inventory are beyond most buyers' budget.
Realtor.com also recently published a report showing that in the 50 largest US metro areas, renting is cheaper than buying when you compare rent and mortgage payments.
Both reports back up the idea that in today's market the short term financially driven choice is to rent instead of buy.
Younger Generations Delay Buying a Home
Another compelling factor in the both reports is that they assume that prospective homebuyers have the money available to choose between buying or renting (and investing their savings). That includes having the funds available for a down payment.
In reality, this isn't wholly accurate as the financial burdens of a down payment and other up front buying costs are keeping many first-time homebuyers out of the market.
Furthermore, data shows that younger homebuyers are choosing or being forced to rent.
- Data from the National Association of Realtors shows that many Gen Z and millennials are delaying buying a home due to a lack of affordable starter homes. The median age of first-time homebuyers hit an all-time high of 40 years old in 2025.
- Only one out of five (21%) homebuyers were first-time homebuyers between 2024 and 2025, which was an all-time low.
- Less than one-quarter (24%) of homebuyers had children under age 18, which was also an all-time low.
Whether it’s out of necessity or because they’ve done the math and realized they can grow wealth even without owning a home, younger generations are delaying home buying and choosing to rent.
Hidden Costs of Home Ownership
If you’re in a position to buy a home, you’ll want to factor in all the costs, including home insurance premiums, property taxes, and maintenance and repairs.
Experts recommend budgeting 1% to 3% of your home’s total price for maintenance and repairs annually. Staying up to date on maintenance, like regularly cleaning gutters and tuning HVAC systems, can help reduce costly emergency expenses.
The advantage to renting, of course, is that when something breaks, it’s usually up to the landlord to get it fixed and cover the repair costs.
Pros and Cons of Buying
Stability, tax benefits, and the ability to build equity are some of the key reasons to buy a home. What are all the pros and cons?
Pros
- Build equity you can tap into
- Create generational wealth
- Stability and control over where you live
- Make updates to increase the home’s value
- Tax benefits
- Potentially earn a profit when you sell
Cons
- Potentially lose money when you sell if the market drops
- Responsible for all maintenance and repairs
- High insurance costs
Pros and Cons of Renting
Renting also has pros and cons.
Pros
- No maintenance costs
- No worries about expensive emergency repairs
- Freedom to move without selling a house
- Cheap insurance
- Rent payments cheaper than mortgage in 50 major markets across the US
Cons
- Landlord can refuse to re-up your lease, forcing you to move
- No equity
- Can’t make changes or updates to your space (typically)
Is Renting or Buying the Best Choice for You?
The decision of whether to rent or buy is a personal choice. Don’t let old adages that renting is a waste of money sway your decision.
The Case for Renting
If you plan to move within five years or less, renting could be the smarter choice. If you’d like the freedom to move at any time or you aren’t sure where you want to ultimately settle down, it’s also better to rent. And if you live in a market like San Francisco where housing inventory is limited and prices are rapidly rising, it is likely financially more advantageous to rent.
And, if you’re someone who doesn’t want to be concerned with home repairs, having a landlord to handle these tasks may be the best solution.
The Case for Buying
On the other hand, if you’re planning to stay in an area for a long time and find a house that will meet your needs now and in the future, it could be a good time to buy. Experts predict that interest rates will remain stable through 2027.
Home prices aren’t likely to drop because demand exceeds supply; that also isn’t likely to change in the near future. You’re not likely to lose money on a home purchase right now, so if buying a house fits your lifestyle and your budget, it could be the best choice.
Conclusion:
The choice comes down to where you want to live and where you are in life. Renting and buying both have benefits, so make sure you do the math and talk through your long term plans as you make your own decision.
Other Articles of Interest:
Make sure to check out other great articles about money management and ways to save, including:
Why a High Credit Score Can Save You Money
How Much More Expensive Is Everyday Life in 2026 vs 2021
Why Americans Feel Broke, Even When Incomes Are Rising
20 Ways To Save Money As Part Of Your Daily Routine
15 Expenses You Can Cut Without Really Missing Them
Sources:
https://www.realtor.com/research/march-2026-rent/
https://www.thestreet.com/personal-finance/many-homeowners-are-putting-their-retirement-in-jeopardy
https://www.fidelity.com/learning-center/personal-finance/SALT-deduction-increase
https://taxpolicycenter.org/briefing-book/what-are-itemized-deductions-and-who-claims-them
https://www.fidelity.com/learning-center/personal-finance/SALT-deduction-increase
https://www.nar.realtor/mortgage-interest-deduction
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