Renting Is Expensive — But It Might Be A Bargain Compared To Owning A Home

Even as many rental properties have become increasingly unaffordable for working-class Americans in recent years, it’s still a less expensive option, on average, than purchasing a home.

This is nothing new, of course. With the exception of a few anomalous periods, home ownership (not only the cost of the home, but insurance, taxes, upkeep, etc.) is more expensive than renting. But the gap has been growing recently.

Consumers are keeping tabs

It’s not hard to come across an article or social media rant about how much landlords have been hiking up the price of rent lately. But as the costs of goods and services have also increased over the same period, it’s worth noting how costly it has become to own and maintain a home.

Here’s a look at where we’re at compared to historical trends:

• Home ownership is typically about 14% more expensive than renting
• Earlier this year, that chasm grew to a staggering 52%
• Despite narrowing in recent months, owning is still 35% more costly

Not only has the cost of home ownership continued to climb, but a spike in the construction of rental properties — and apartment buildings in particular — have allowed lease rates to remain relatively stable over the past year.

Is the American Dream dead?

None of this should serve to dissuade anyone from making an informed decision about whether to purchase a home. It is telling, however, that one recent survey found a record-high 36% of consumers now prefer renting to owning a home.

A snapshot of the current landscape does not indicate future trends, though, and there is some reason for optimism. Mortgage rates are inching downward, which should help bring down the relative cost of owning a home.

But real estate prices remain high (and getting higher) without any immediate relief in sight.

Chris Agee November 25th, 2024

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