The question of renting versus buying is often framed as a generational one. The narrative goes that baby boomers, growing up in an era of unprecedented economic plentitude, were able to buy homes at affordable prices subsidized by the government. Millennials, on the other hand, live in a time in which it is tough to afford a home even when working a well-paying job.
There is merit to this narrative. It is definitely much more difficult to buy a home in today’s world than it once was. Space is at a premium with the population growth of the last few decades. The competition in a capitalist economy has driven prices up, so that building has become very expensive.
Meanwhile, wages have not increased at the same rate, so that putting down a deposit on a house is a pipe dream for many. Rent is seen as the consolation prize.
However, the reality is not that simple. Buying a home in 2020 is not necessarily the best choice for everyone, even if they can afford it. Renting has its benefits as well, so that some may well hesitate before using their savings for a downpayment on a home.
To clarify why this may be the case, here is a comparison between renting and buying a home, with the benefits of each.
Buying: You own property
The most obvious benefit of buying over renting is that you own your home. Yes, it might take a couple of decades before you have paid off the bond, and if you fail to do so your home will be repossessed. However, it is still yours to do with as you please. You don’t need anyone’s permission to make design choices, and you can choose how to live your life.
Furthermore, when you get older, you will have a place to retire which is paid off. You don’t have to worry about earning enough to pay high rent prices, and you can use your savings on living your best life.
Renting: You have money to spend
Renting, on the other hand, is significantly cheaper. Your only deposit is one month’s rent as security. You can find a small place that works for you now, upsizing when you need to without having to go through the process of selling and buying again. You have flexibility, and with it more disposable income.
You probably won’t ever own the place you live in, but you can spend your money on experiences instead. You are more likely to get to travel, try new things, and the freedom of considering how you want your home life to look.
Buying: Income opportunities
When you buy a home, you can actually use it to make money. This is especially true if you have a lot of space. You might be able to build a cottage that you rent out, earning the value of your mortgage payments. You can charge a good amount of rent, without being unfair.
Alternatively, you can list a room or two on Airbnb, making some extra cash while meeting visitors all the time. If you love your city, this is a great opportunity to show others what you love about it.
If you do decide you want to live elsewhere or even downsize, you can keep your property while renting it out to someone new.
Renting: No maintenance stress
One of the big stresses that comes with owning a house is maintenance, especially in a state like PA, where you can battle with humidity and other weather conditions that cause wear and tear. It is constantly required in order to keep your home in tip-top shape. Renting ensures that this remains someone else’s problem.
Yes, you still have to take care of the place, as well as your own stuff. You can find out more on this website about using PA-based renters insurance to keep yourself covered. However, the responsibility for maintenance is left to the owner.
Buying: Release your creativity
We tend to think that there are two types of people: those with creative instincts and those without. The reality is not so simple. On the contrary, even less creative people want to create. Life’s responsibilities tend to inhibit that urge.
A home that you own can be your ideal creative project. You can design as you wish, finding the interior style that suits you. It is your canvas that you can make the most of, even if you have little experience.
Renting: Don’t get tied down to one location
Owning your home makes moving across the world that much more difficult. You can sell, or find tenants, but once you own your home it is difficult to part ways. That’s why, if you’re the type of person who prefers to chase experiences rather than possessions, renting might suit you better. You don’t want to feel stuck in your home state.
If you’re looking at the financial big picture, renting is not ideal, because you are spending money you could use on a mortgage on a place you’ll never own. But it does open up opportunities that aren’t there for those who are tied down by homeownership.