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. ■
IMO, buying a house early in your life is similar to investing in a 401k retirement plan. In theory, your house is paid for when you retire and you only pay rediculously out-of-confrol property taxes. But renters pay property taxes too and renters are subject to the vaugaries of the rent market which is like having an adjustable rate mortgage for your rent payment which, unlike ARMs, rent never goes down. No thanks.
Really good comments about high capital maintenance costs once the house reaches about the 20 year mark. At around that time it seems like almost everything reaches their useful service life at about the same time and needs to be replaced. But yeah, there is nothing like owning your own place.
A renter can be displaced by a “Migrant”...
Unfortunately, Trump was apparently bluffing when he ran on mass deportations, since only that would reasonably right the housing market—and raiser regular worker incomes.
The gubmint messed up the interest rates to inflate the GDP and support the illegal invasion.
Home prices went up too high
Home prices need to deflate
I would rent short term. Could be some nice buying opportunities this fall.
Boomers looking to cash in for their retirement could take it in the ear
The most important consideration is your lifestyle and work.
Your employer, or yourself, may move from one location to another as you climb a career ladder.
Renting is best in that scenario, and perhaps buy a vacation property
Home ownership can be either a place to bank equity, or an anchor that is troublesome to unload.
Is this about women or houses?
my rent for a SFR is about half of what my old mortgage payment was when I owned. I like it ... never thought I would ...
lol. I get that. I always joke with neighbors that I never asked Santa for a roof or windows. As kids, you have no idea the money that drains from a house.
We rented for 6 months after selling a home, to give us time to find a home we wanted to move into - we spent as much on rent as we do now for our mortgage and HOA fees (which handle a lot of insurance costs we would incur with a home that wasn’t part of an HOA - along with any maintenance outside our interior walls. And we can sell for about $100K more than we paid if we decide to move again.
Different strokes for different folks...
Surly the most affective way. Yeah.
Total up your rent, see what you get. Why do you want to pour your money into some other person’s pocket?
The premise of the article is wrong. Since we live in America, I don’t care what the rental market is in Hong Kong.
I just checked a mortgage calculator and compared the current value of my house and current rates with what one of my kids is paying for his townhome rental.
It’s about even.
We refinanced when rates were at rock bottom. Our mortgage is less than any of our kids are paying to rent. And when I sell, I will have equity that they won’t.
I have a relative that had a bought an empty lot, and built a building for his small business. The lot had some unused land behind it. Twenty some years ago a guy walked up to the business and talked to him about putting up some sort of tower. Something about communications. Originally telling the guy to get lost, the guy did say they’d pay him for it, and said yes. For more the next twenty years they were paid handsomely each month for having that a cell tower on his property. The payments continued long after the business closed and he leased the building, and settled into retirement. Turns out that wireless telephones would later catch on…
Been my view that renting(I live in a small rural area & renting seems badly out of reach for many here,not that buying is any bargain either. The big problem with renting is that many property owners have had bad experiences with renters & seek to charge high enough rental to cover their bases. A person who would take care with a rental is paying extra for those who don’t.
I agree. Our mortgage payment is less than one half of what our house would rent for. the escalation in value has given us incredible equity which we are soon going to cash in on.
True. It’s still a crap shoot.
Especially now. Conditions were much better for buyers 30 years ago.
I say rent, live frugally, save, and wait. Don’t give in to FOMO panic. There will be a correction and that will be the time to buy. Buyers with cash will be in the drivers seat. Have patience.
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