Click here: to donate by Credit Card
Or here: to donate by PayPal
Or by mail to: Free Republic, LLC - PO Box 9771 - Fresno, CA 93794
Thank you very much and God bless you.
Posted on 01/08/2026 8:37:44 PM PST by SeekAndFind
That our people should live in their own homes is a sentiment deep in the heart of our race and of American life,” said President Herbert Hoover, perhaps the most important advocate of mass homeownership in the country’s history, in 1931. “They never sing songs about a pile of rent receipts.”
But a ballad about the rental market is overdue. When rich-world interest rates began to surge in 2022, renting became a better deal than buying. House prices have since stagnated or slumped in many places, and rates are falling. Even so, there is reason to think that the winning streak for renters will continue.
According to Zillow, an American property website, the monthly cost of buying and keeping a home—including taxes, insurance, a modest maintenance cost and a downpayment of 20%—came to less than that of renting from 2015 to 2021, an era of ultra-low interest rates. Since then, however, the picture has flipped. Today a new buyer pays about $400 more a month. In several of the country’s largest cities, the difference runs to thousands of dollars a month.
This is not just an American phenomenon. According to CBRE, an estate agent, there is no Australian precinct where it is cheaper to buy a flat than to rent one. Rathbones, a British wealth-management firm, estimates that rental yields—the amount landlords make from tenants relative to the price of the house—are 5% or so, not much above the 4.4% for five-year fixed mortgages. Given that landlords must also meet steep maintenance and tax costs, this indicates renters are getting a good deal.
Renters often fear they are throwing away money by handing it to landlords, while buyers build up home equity. But property is not the only investment available. Arthur Cox of the University of Northern Iowa finds that, even from 1984 to 2013, a period of rising house prices and declining interest rates, people were sometimes better off if they avoided homeownership. In three of the six American metropolitan areas he investigated, renting and investing the extra money that would have been required for mortgage payments in stocks and corporate bonds was the more profitable choice.
True, in some places renters have recently lost ground. In Hong Kong, for instance, rental yields have risen from less than 2.5% four years ago to 3.5% today. The shift has been driven by a slump in house prices, which have fallen by a third in real terms since 2021.
But there is a difference between mortgages in Hong Kong and those in other rich-world locations. Hong Kong’s borrowers mostly take on floating-rate mortgages, which typically move with the Federal Reserve’s short-term interest rates. Elsewhere, mortgages are more likely to depend on longer-term rates. And they have barely budged: despite recent interest-rate cuts, five- and ten-year government-bond yields mostly sit where they did three years ago. In America 30-year mortgage rates remain above 6%, more than twice the rock-bottom levels reached in the covid-19 pandemic. Although buyers can find shorter-term mortgages, they take on the risk of a rebound in inflation when doing so.
Picking a likely victor in the ongoing battle between tenancy and ownership thus means taking a view on the future path of long-term interest rates. Your columnist would suggest that they look worryingly sticky. Concerns about government debt and long-term inflationary pressures are not going anywhere.
Moreover, in recent years renter-friendly regulation has swept the West. Britain’s Renters’ Rights Act makes it more difficult for landlords to evict residents, and enables tenants to challenge rent increases via tribunals. Many American cities have frozen regulated rents, as Zohran Mamdani, New York’s new mayor, intends to do in his city. Such rules are terrible news for anyone considering making an investment in housing. They tip the calculation further in favour of tenants.
Buyers have reasons to own a home that surmount cold financial logic. Many feel the same emotional pull that animated Hoover almost a century ago. Others want a secure and long tenure. And in some markets, it is just a question of practicality: finding a large, single-family home to rent can be difficult. But for the cool, unemotional resident weighing up the pros and cons of buying, there is a clear winner. Absent a much steeper fall in house prices, a sudden decline in long-term interest rates or a protracted surge in rents, renting will remain the better option. ■
|
|
Click here: to donate by Credit Card Or here: to donate by PayPal Or by mail to: Free Republic, LLC - PO Box 9771 - Fresno, CA 93794 Thank you very much and God bless you. |
A lot depends if you want to spend a lot of time maintaining your home. Or if you’d prefer to just call the landlord to get things fixed and enjoy your time on other things. The amount of time it takes to maintain a home is amazing and not for everybody.
Owning real estate and actually clearing your mortgage is my preference.
However, if job mobility is your thing, it’s hard to beat the rental options.
It depends on the person and situation.
“...Is it better to rent or buy?...”
-
It depends.
I will always choose owning over renting. I want to wake up in the morning in my own house, not someone else’s. As for upkeep, that’s a small price to pay for knowing that you’re not going to be displaced by a new landlord. I pay way less for my house than even what a dingy two bedroom apartment goes for. And I have three bedrooms, two bathrooms and a spacious two car garage at the end of a dead-end street in a gated community. I don’t have to worry about through traffic or porch pirates.
RE: Jimmy McMillan (Rent is Too Damn High Party)
See my Post #1
I think people need to be totally aware of how much living in a house is. Once a house turns 20, you have huge expenses. A new roof, new HVAC, new windows, appliances typically are ready to be replaced (if you’re lucky to get 20 out of them). Then painting the house, driveway and walkway. And that’s just off the top of my head. Yep all this was done in the last two years or so. In Florida, all this happens because weather is tough on a house.
It’s better to own. The powers-that-be just want us to believe renting is better because they don’t want us to own anything.
“It depends”.
The correct answer. There are few “one size fits all” answers in life.
If you live in Florida or Texas, you might as well rent as your payments (particularly for insurance, but also property tax) will be nearly as much as rent, even if you have no mortgage.
“You’ll own nothing, and you’ll be happy”...
Bookmark.
At this point in our lives, owning is much less than renting. I guess if we sold our home, we could use the money to rent for a while, but our monthly income is not enough to pay the current rental rates, own a car and eat.
Same here in North Idaho. Our place is about 32 years old. Fortunately, the kitchen was remodeled about 12 years ago and they did a first-class job. We bought it 8 years ago. But the paint needs a lot of work. We put a new roof on about three years ago and that cost about $35k. We had a huge windstorm three weeks ago and had to take down two large, mature red fir trees. That was another $3,000 to take them down and grind the stumps.
Yes, people really underestimate the maintenance costs and how they all hit at once at 20-30 years. There’s so much that goes wrong in that time window you have a hard time doing it all yourself, too.
We lived in the same house for over 40 years and had the same conversation repeatedly. We just did “such and such”. No that was years or decades ago.
I will always choose owning over renting. I want to wake up in the morning in my own house, not someone else’s.
__________________________________________________________
I live in two homes that I own free and clear and rent out several homes. The raw truth is that while you may not owe money to a mortgage company the house isn’t really yours, you are just renting it from the government. Stop paying your exorbatant taxes and see what happens.
One of my rentals is a cell tower lot. It barely covers my property taxes each year. One rental I had this past summer required well over 20k to get it ready for the next renter. The first months rent takes care of the insurance, the second takes care of the property tax and the third takes care of the fee to be a landlord in my county and the business license my town requires to be a landlord. If I don’t live two more years I won’t make any money on the income of the house. That being said however in the 20 years I have had most of my houses they have trippled in value according to the county valuation assessment, what a scam that is.
I don’t think a person could make anywhere near the value of the house appreciation by investing the difference between rent and owning. Renting is likely a little cheaper in many ways but once you throw in the increased value from appreciation there is no contest.
Buy. Always.
bump
“I will always choose owning over renting. I want to wake up in the morning in my own house, not someone else’s.”
That is my selling point!
I’d rather suffer all the hassles of home ownership
than depend on a landlord to give me permission to
fix or improve something.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.