4 Reasons to Rent a Home in 2024 -- Instead of Buying

I haven't been shy about my intention or preparations to get on the property ladder again in 2024 -- but I don't expect the process to be as smooth or easy as it might have been before COVID-19 and the resulting shake-up in the housing market.

If you're wondering whether you should buy a home in 2024, here are a few reasons why it might be better to keep renting this year.

1. Mortgage rates are still high -- but could fall

While mortgage rates have slipped down a little since a high of 7.79% in late October 2023, we are still a far cry from the rates around 3% we saw in 2021. As of this writing, the average rate for a 30-year fixed mortgage loan is 6.6%, according to Freddie Mac. And this rate will only serve to make buying a house even more expensive.

As an example, here's a breakdown of your monthly mortgage costs for principal, interest, property taxes, and insurance (PITI), assuming a purchase price of $250,000, a down payment of $25,000, $3,000 in property taxes per year, and $100 per month for homeowners insurance:

This is just an example, and I recommend plugging your own numbers into a mortgage calculator. But it illustrates a stark point -- buying in 2024 will mean paying a lot more for a mortgage than you might've just a few short years ago.

Some of the biggest names in the industry are predicting cheaper days ahead, however. For example, the Mortgage Bankers Association is predicting rates below 6% in 2025 -- so it might be better to wait to buy if you can.

2. The housing supply is insufficient to meet demand

To add insult to injury, the housing supply is also presenting a problem for those of us hoping to buy. Thanks to those higher rates, current homeowners are loath to put their homes on the market and buy something new at a rate that could be double the one they have now.

The most recent data from NAR found that as of December 2023, there was only a 3.2 months' supply of homes on the market -- and to satisfy buyer demand, that figure would need to be enough homes for four to six months. Since supply is lacking, buying in 2024 would mean facing more competition than you might if you waited until listings were more plentiful.

3. Owning costs more than renting

Once we get past the initial cost of buying a house, the expenses of homeownership just keep coming. Expect to pry open your wallet more often if you own -- maintenance problems that were formerly the purview of your landlord (such as a wasp infestation or a malfunctioning water heater) will now be your responsibility. Even the regular work of maintaining a house, such as lawn care and gutter cleaning, takes time -- or money, if you'd rather outsource them (no shame).

Your property taxes will likely climb over time, and homeowners insurance premiums likely will too, thanks to climate change and inflation. Motley Fool Money found that in 2019, homeowners paid an average of $8,609 more than renters did -- about $717 more per month. That extra cost went toward maintenance, taxes, and utility bills. A jump in utility costs is to be expected if you're going from a rental apartment to a larger single-family house.

Ready to take on all these extra costs? If not, renting is a better choice in 2024.

4. Renting gives you more flexibility

Ultimately, renting a home, rather than owning one, means flexibility. I made the mistake of buying a house in my 20s, long before I had any idea of where I might like to settle long term, and also long before starting a career that gives me the ability to work from anywhere.

When I was laid off from my job and ended the marriage I was in not long after, I was put in the terrible position of being unable to afford my house -- and stuck with it until I could get my mortgage lender to agree to a short sale. It took more than three years before the house sold and I was finally out from under this financial commitment, and by then I was living in another state and just a few months away from moving to yet another one.

If you're not settled in your job or your life, or if you're like I was, and in a career that requires you to move if you want any chance of advancing, don't buy a house this year. Don't buy one until you've got your financial feet under you and can confidently say you're willing to stay put for at least five years (I've never even lived in the same city for that long as an adult -- let alone the same house). It is much, much easier and less expensive to break a lease than to sell a house.

Rest assured, renting doesn't make you any less of a "real adult." If anything, honestly assessing your financial situation and goals and making the best decision for you makes you even more responsible than someone who rushes into homeownership because they assume it's the logical "next step."