Renting forever or buying a house?

Renting has become increasingly common, particularly among millennials and Gen Z, due to housing affordability crises. In 2023, the median home price in the US reached $431,000, requiring an income of about $115,000 to afford comfortably, while median household income was $74,580. In cities like San Francisco, London, Paris, and Sydney, rent-to-buy ratios exceed 25 (price equivalent of 25 years of rent). Renting offers mobility, important in an era when Gen Z workers change jobs every 2.8 years on average (LinkedIn data). Renters avoid property taxes, maintenance costs (about 1 to 3 percent of home value annually), HOA fees, and the financial risk of value drops (like the 2008 housing crash). The 'rent and invest' strategy, popularized by Ramit Sethi and rebloggers on FIRE forums, argues that investing the down payment difference in index funds can outperform homeownership.

Homeownership remains a cornerstone of wealth building in many cultures. In the US, the median net worth of homeowners ($396,200, 2022 Federal Reserve data) is about 40 times that of renters ($10,400), primarily because mortgage payments build equity. Over 30 years, a home appreciating at the historical 3 to 4 percent annual rate doubles or triples in value. Tax benefits include mortgage interest deduction and capital gains exclusion up to $500,000 for married couples. Beyond finance, owning provides stability: no rent increases, freedom to customize, deep community roots, and a tangible inheritance for children. In countries like Spain (76 percent), Italy (72 percent), and Romania (96 percent), homeownership is the norm. The Homestead Acts (1862 onwards) made US land ownership accessible. Real estate also serves as an inflation hedge.