Renting Is Cheap for Me. Here's Why I'm Buying a House Anyway

Common wisdom holds that you should strive to keep your predictable housing costs (be they rent or a mortgage and associated expenses) to less than 30% of your income. Unfortunately, this is impossible for many Americans -- in 2022, more than half of us spent more than that, according to data collected by the Harvard Joint Center for Housing Studies.

I'm lucky these days in that my current rental situation is quite affordable for me. Plus, unlike many Americans, I haven't experienced a rent increase since moving into my current place in 2021. As a result, I've been able to save a lot of money toward the purchase of a home. In my darker moments, I wonder why I should sink so much money into this when I can keep renting for cheap and avoid the significant costs of owning. That's when I remind myself about the following differences between owning and renting.

Renting doesn't let you build equity

I'm happy to have historically paid very little for a rental (as an adult, I've resided in lower cost-of-living cities). But despite sending rent money month after month, when I move out of a rental, I have nothing to show for it.

This is not inherently bad -- renting isn't throwing money away, it's paying for a place to live and avoiding the big costs of maintenance and repairs along the way. But I've reached the point in my life where I'd rather pay money every month and build equity.

Home equity refers to the amount of your home that you own outright (as opposed to what your mortgage lender owns). Let's say you take out a mortgage for $250,000, and over 10 years, the home appreciates in value to $300,000. You've paid $100,000 toward your principal balance and still owe $150,000. So you have $150,000 of equity in your house (the current value of $300,000 minus the remaining $150,000 mortgage).

Having equity means you can borrow against your home if you need or want to -- say, in the form of a home equity loan or line of credit. And over time, you'll own more and more of your home, which is an expensive asset. This is one of the reasons homeowners tend to be richer than renters.

Renting means not changing a living space

I've lived in a huge range of rental homes -- from smallish apartments in complexes that were just a few years old to houses built more than a century ago. Regardless of my surroundings, as a renter, there was very little I could do to appreciably change the space -- everything needed to be temporary or easily undone.

For example, I hate glass shower doors (hard to keep clean and often so poorly maintained that they no longer slide smoothly). And I have a hand-painted shower curtain that was one of my art projects from COVID-19 lockdown four years ago. Since it's easy to take shower doors down temporarily and replace them with a curtain, I can do that in a rental. But removing a wall, upgrading kitchen cabinets, or replacing wood paneling with drywall? All a no-go for a rental home.

Renting isn't always pet-friendly

I started thinking seriously about buying a home again after adopting my third cat in 2021. I wanted a third for a few years beforehand, but I lived in a series of rentals where I was limited to just two.

My current lease is less restrictive -- but I know that if I keep renting, I'm likely to face issues finding a new rental home for the four of us in the future. But if I buy a house, I won't have a landlord telling me I can't expand my little family -- and I can make changes to that house to make it better for my cats (such as a catio).

Renting often offers a less-stable living situation

After 35 moves, I've gotten really good at packing and unpacking my belongings, but these are skills I never wanted. One of the best perks of renting over buying is flexibility -- it's far easier and cheaper to break a lease than sell a home. But that flexibility goes both ways.

In most cases, I moved out of rentals because of changes in my own life, like a new job. But I've also moved because of unsafe living situations, as well as landlords deciding to sell a house out from under me. I hope that by buying, I can settle in and beat my old record for longest time gone without moving -- just four years.

Ultimately, I am finally ready to buy -- what about you?

I spent the last two years getting my finances in shape to make it possible for me to buy a house again. I'm not 100% comfortable with the increased monthly outlay of money I'm intending to take on (not to mention the huge upfront expenses of down payment and closing costs), but my distaste for renting has grown the last few years. I'm done living a nomadic life, and I no longer work in a field where that's par for the course. So despite the extra costs, I'm house hunting.

Buying a home is a big deal for anyone, and since personal finance is, well, personal, it's up to you to decide. There's no shame in renting instead -- you'll save money and enjoy flexibility you won't get if you buy a house. But consider your own wants and needs and crunch the numbers to make the right call for you.