About a year after I moved back to my childhood hometown, following my divorce, the big question I was being asked by nearly everyone I knew was, “When are you going to buy a home and stop renting?”
I’d already gone down the homeownership route and decided it wasn’t for me. And there’s a good reason for that: I found homeownership expensive and not worth it.
Homeownership Is Less Affordable for Young People
There’s been much hand-wringing over the fact that many millennials still aren’t buying homes. Part of the problem, though, is that many young people can’t afford to buy a home. In England, a recent study from the Institute for Fiscal Studies found that 40 percent of young adults can’t afford to buy a cheap home in their locality, even with a 10 percent deposit.
Those findings tally well with what’s happening here in the United States, too. Earlier this year, Trulia reported that it costs up to 41.2 percent of income to buy a starter home. On top of that, compared to six years ago, starter home prices are 57.9 percent higher, even while the square footage has shrunk.
According to Zillow, the median cost to buy a home as of Aug. 31, 2018, is $216,700. Even if you only put 10 percent down instead of 20 percent, you’re looking at coming up with $21,670. And that’s with trying to make student loan payments and dealing with the fact that real wages have been mostly stagnant for decades.
Why I Love Renting
If it were just a financial issue, though, many millennials could overcome the challenges. We live in a golden age of side hustles and technology that gives us the ability to start businesses and quit our day jobs. I haven’t worked from an actual office in almost 15 years.
So, the reality is that I could buy a house — if I wanted to. But, I don’t want to. Been there, done that. Homeownership came with responsibilities I just didn’t enjoy. Maintaining the yard (something I eventually outsourced), regular maintenance and the prospect of future repairs were all things I didn’t want to deal with.
When you rent, especially if you live in an apartment or condo, all of that is taken care of for you. At my last apartment complex, they even came and changed the furnace filters regularly. For me, convenience is paramount. And I love that when the wind blows down the fence at my current rental, I don’t have to deal with getting it fixed and working with the insurance. That’s my landlord’s responsibility.
More on the Appeal of Renting: Reasons You Should Rent a Home Instead of Buying One
And, of course, if you buy a house, you have to deal with it when you move. We had to move across the country suddenly when my then-husband was offered a new job. We knew we didn’t want to be landlords, so we sold — and took a $12,000 bath.
Today, I love renting because it’s convenient and I have more freedom. I’m on a month-to-month lease now, so if I want to leave, I just give notice and pack up — no pesky house tying me to the area.
How I Invest My Money Instead
I don’t view a primary residence as a financial investment. By the time you pay interest on a loan that big over the course of 20 or 30 years, deal with insurance and property tax costs and pay for maintenance and repairs, you’re lucky to break even in many markets.
A home that you live in is more of an emotional and lifestyle investment. So, I prefer to put my money into other assets, including building up my tax-deferred accounts, putting money into my travel fund and, if I really want real estate exposure, investing in real estate investment trusts.
There’s no one way to make it work. I know lots of people who love owning a home or who love being a landlord and generating passive income from a real estate empire. But for many of us, home ownership is just too costly on more than one level. We’re happier renting.
More From Our Smart Money Squad