Renting is cheaper right now. In a lot of markets, considerably cheaper on a month-to-month basis.
So why would you buy a house at all?
That's the honest question, and our answer is still that for most people who can comfortably afford to buy and expect to stay put long enough, homeownership remains the better long-term wealth-building path.
Not because houses are magical investments. Not because prices always go up. And not because renting is throwing money away.
Homeownership works because it puts several forces on your side at the same time: a mostly fixed payment, forced equity accumulation, leverage on appreciation, and time. Most importantly, it creates a structure that forces you to build wealth every month without requiring you to make the decision to save again and again.
That matters more than the spreadsheet gives it credit for.
Renting really is cheaper in many markets today. If your life is uncertain or you may move in a few years, renting can absolutely be the right decision.
A fixed-rate mortgage locks the biggest part of your housing payment while rents continue to change over time.
On a $475,000 mortgage at 6.5%, you pay down roughly $5,300 of principal in year one and about $72,000 over ten years.
A disciplined renter who invests the down payment and every dollar of monthly savings can build significant wealth. The problem is that most households don't actually behave that way.
Federal Reserve data show median homeowner net worth around $396,000 versus roughly $10,000 for renters and other nonowners. Homeownership does not cause that entire gap, but forced savings is part of the story.
Zillow's current model assumes the renter invests the difference, and buying still breaks even nationally in about six years. In a few very expensive markets, renting can remain ahead even over 30 years.
The bar to buy should be higher today. We want you closer to 90/10 that ownership fits your finances and your life, not 60/40 and hoping it works out.
Four and a half years ago, we recorded the first episode of this show about why homeownership matters.
In early 2022, the median principal-and-interest payment for a conventional purchase applicant was about $1,750. By July 2026, the median payment for a new purchase applicant had climbed to about $2,175, with mortgage rates in the mid-6% range.
Home prices make the affordability shift even clearer. The median existing-home price nationally was about $434,100 in July 2026, while California's median existing single-family home price was nearly $888,000.
The math got harder. It did not stop working.
We've also been doing this long enough to know how easy it is to believe the market you're living through is the market that will exist forever. Josh started closing mortgages in 1996. Between the two of us, we've worked through the late-1990s market, the housing boom, the crash, years of recovery, historically low rates, the COVID housing surge, and now one of the worst affordability stretches in decades.
Every one of those markets felt permanent while we were living through it. None of them were.
If you're considering buying a home today, you're not making a decision based on the next twelve months. You're making a decision that may affect the next seven, ten, twenty or thirty years of your life.
That's the lens we want to use.
Let's not dance around it.
Take a $500,000 home with 5% down and a mortgage around 6.5%. Using the intentionally conservative example we used in this episode, including principal and interest, taxes, insurance, mortgage insurance and roughly 1% of the home's value per year for maintenance, the all-in monthly cost is around $4,225.
Suppose a comparable home rents for $3,000.
That's roughly $1,200 a month cheaper to rent.
For most people, $1,200 is real money. If you don't know where you'll be working three years from now, where you want to live, whether you're getting married or whether you'll need a different kind of home, that gap may make the decision for you.
Rent the house. Keep your flexibility. Bank the savings while you figure out what comes next.
We are not trying to talk everyone into owning a home. But we do want to make sure you're comparing the two choices correctly.
On that $475,000 mortgage, about $440 of the first month's payment goes toward principal. Over the first year, you pay down roughly $5,300. Over ten years, assuming you simply make the scheduled payments, you've reduced the mortgage by about $72,000.
That money isn't a housing expense in the same sense as interest, insurance or maintenance. You moved it from your checking account into equity in the home.
So the full $1,200 monthly difference is real from a cash-flow standpoint, but it isn't the full economic difference. More than a third of that gap in the first year is principal reduction, and that amount grows every month.
This is the strongest argument against what we're saying, and it's a legitimate one.
Rent the house for $1,200 less. Keep the down payment invested. Invest the $1,200 difference every month. Over time, that can build substantial wealth too.
If you actually do it for decades, you can build a lot of wealth.
Zillow's 2026 Rent vs. Buy analysis modeled exactly that question. Its model assumes the renter invests the money that otherwise would have gone toward the down payment and closing costs, then continues investing the monthly savings whenever renting costs less than owning.
Zillow isn't assuming the renter sticks the money under a mattress either. Its rent-versus-buy methodology gives the renter a return based on the 10-year Treasury yield.
Even with that assumption, Zillow currently finds that buying the typical U.S. home pulls ahead in roughly six years.
There are markets where that isn't true. In San Francisco, San Jose and New Orleans, Zillow's assumptions leave renting ahead even over a 30-year period. Los Angeles, Seattle and San Diego also have very long breakeven periods.
So we're not arguing that owning wins every spreadsheet in every city.
We're making a different point:
Most people do not invest the difference.
The Federal Reserve's Survey of Consumer Finances found median net worth of about $396,200 for homeowners versus $10,400 for renters and other nonowners in 2022.
That does not mean the house caused a 38-to-1 wealth difference. Homeowners tend to be older, earn more and differ from renters in plenty of other ways.
But here's the statistic that matters for this argument: an Urban Institute analysis of the same Federal Reserve data found median financial wealth excluding the house of about $85,000 for homeowners versus only about $960 for renters. Renters' median financial wealth has stayed roughly between $400 and $1,200 since 1989.
That doesn't describe the perfectly disciplined renter who invests every dollar.
It describes actual households.
Homeownership's advantage isn't magic. It's enforced discipline.
You make the mortgage payment because you have to. Part of that payment reduces what you owe whether the stock market is up, down or you simply don't feel like saving that month.
Ten years later, you look up and the balance is lower.
That's the flywheel.
A flywheel takes a lot of effort to get moving. Once it has momentum, keeping it moving takes much less effort.
Homeownership works the same way, but there's an important sequence to it.
First, you have to become a homeowner. That's the hard, front-loaded part. You save the down payment, get your credit and finances in order, build stable income, qualify for the mortgage, close on the house and make the jump from renter to owner. That first payment can feel enormous.
Once you've made that transition, the nature of the work changes. You go to work, raise your family, take vacations, deal with everything else life throws at you and make the mortgage payment every month.
While you're living your life, four forces start working in the background.
A fixed-rate mortgage does not freeze your entire housing cost. Property taxes, insurance, HOA dues and maintenance can all increase.
What you lock down is the biggest piece: principal and interest.
More than 90% of U.S. mortgages are fixed-rate loans. That means the contractual principal-and-interest payment doesn't rise just because market rates or rents do.
Compare that with what happened to renters during and after the pandemic. Single-family asking rents increased roughly 47% nationally over that period.
A renter gets flexibility, and that flexibility has value. What the renter doesn't get is certainty about what the landlord will charge five or ten years from now.
Landlords can't simply charge anything they want. The market sets the rent. But insurance, maintenance, property taxes and operating costs all affect the economics of owning rental property, and over time those costs put upward pressure on what landlords need to collect.
As renters, you're not insulated from the roof, water heater or insurance premium. You just pay for those costs indirectly.
This is probably the most underappreciated part of homeownership.
Take our $500,000 example again. With 5% down, the loan is $475,000.
At 6.5%, the principal-and-interest payment is about $3,002. In the first year, roughly $5,300 reduces the loan balance. After ten years, scheduled amortization has paid down about $72,300.
You don't have to decide to save that money every month. You make the payment, and the principal reduction happens automatically.
Think about how automatic enrollment works in a retirement plan.
Many employers now automatically enroll eligible employees in their 401(k). A percentage of every paycheck starts going into the retirement account unless the employee actively changes the contribution or opts out. After a while, most people barely think about it. They simply learn to live on the money that's left.
That's the whole point of automatic enrollment. It changes the default from "I need to remember to save" to "I'm saving unless I deliberately stop."
A mortgage creates a similar behavioral structure.
Nobody sends you a reminder every month asking whether you'd like to build some equity this time. You make the housing payment because you need somewhere to live, and part of it automatically reduces what you owe.
When saving requires a brand-new act of discipline every month, life has a way of getting to the money first.
The mortgage makes the decision for you.
Appreciation isn't smooth, and Josh's own experience is a pretty good illustration.
He bought his home in 2002, just as prices were beginning a major run. Over the next several years, the property nearly doubled in value. Then the housing crash hit, and roughly $300,000 of that value disappeared.
The home didn't immediately recover. It traded mostly sideways for years before appreciation started again, then accelerated sharply during and after COVID. More than two decades after he bought it, the property is worth more than three times what he originally paid.
That's housing over a long enough timeline. There can be huge gains, painful declines and long stretches where seemingly nothing happens.
Over the long run, though, national home prices have appreciated significantly. The FHFA national home-price index has grown at roughly 5% annually since the mid-1970s.
We would not build today's homebuying decision assuming 5% appreciation continues. For our own planning, we'd rather use something closer to 2% to 3% for the next stretch and be pleasantly surprised if the market does better.
That's where leverage matters.
You put $25,000 down on a $500,000 home and control a $500,000 asset. If the property appreciates just 2% in year one, that's a $10,000 increase in value.
You invested $25,000 in the asset and appreciation created $10,000 of additional equity.
That's a 40% return on the original cash you invested, from appreciation alone.
There are still costs associated with living in the house. You pay mortgage interest, taxes, insurance and maintenance. But those are part of the cost of shelter, and a renter also has a cost for shelter.
They don't change the leverage math.
Your $25,000 controlled a $500,000 asset, and a 2% increase in that asset created $10,000 of equity for you.
That's why leverage is so powerful.
It also cuts both ways. A 2% decline in the home's value is a $10,000 decline, which is 40% of that same original $25,000 down payment on paper.
That's why leverage works best when you combine it with the final force: time.
Take the same $500,000 house and assume just 2% appreciation for ten years.
The home would be worth roughly $609,500, or about $109,500 more than where you started.
During the same ten years, you've paid down roughly $72,300 of the mortgage.
Put those together and you've created about $181,800 of additional gross equity, on top of the original $25,000 down payment, before accounting for selling costs.
None of that required predicting the perfect year to buy. It required buying something you could afford, staying long enough and making the payment.
That's why we keep coming back to the same idea: time in the market matters more than timing the housing market.
The average U.S. homeowner now stays in their home about 12 years.
You may not know you'll stay in your new home for twelve years when you buy. Josh had no way of knowing he'd still own the house he bought in 2002 more than two decades later. In fact, the original plan was to stay less than ten years.
Then life happened.
Wherever possible, buy a home that can serve you for a long time.
Time gives the flywheel room to work.
There is no one national answer.
Zillow's current analysis puts the national breakeven at about six years. In Columbus, Memphis and Buffalo, it's roughly four years. In a few extremely expensive markets, renting remains ahead for decades.
And remember, Zillow isn't sandbagging the renter in that comparison.
Its model assumes the renter invests money that otherwise would have gone toward the down payment and continues investing the savings while renting is cheaper.
That makes the result more interesting to us, not less.
Our belief is that in all but a handful of unusually expensive markets, ownership remains the better long-term financial path for people who can comfortably afford the home and stay long enough.
It's a belief informed by the math, nearly three decades of experience and actual household behavior. It is not a guarantee about any specific house.
If you're buying in San Jose, your numbers may tell you something completely different from someone buying in Memphis.
Run your numbers.
The math matters, but it isn't the only reason people buy homes.
The National Association of Realtors' buyer research consistently finds the same thing: the leading reason first-time buyers purchase is simply the desire to own a home of their own.
There's value in control.
Jeb had to tell a tenant recently that his lease wasn't being renewed. The property owner had died, the heirs decided to sell, and the tenant had to move again after only a year.
The tenant had done nothing wrong.
It just wasn't his house.
Homeownership gives you more control over where your kids go to school, whether they stay with the same friends and Little League team, whether you paint a wall, get a dog or stay in the neighborhood for another ten years.
You can't put every one of those things into a rent-versus-buy calculator, but they still have value.
None of this means you should stretch to buy a house simply because ownership has historically built wealth.
We actually think the opposite.
In 2018 or 2019, rates were low, appreciation was stronger and the monthly premium to own was much smaller. If you were 60/40 that you wanted to own, the financial environment gave you more room to be wrong.
Today's market requires more conviction.
With a wider gap between renting and owning and more modest appreciation expectations, we want you closer to 90/10 before you buy.
Do you expect to be there seven to ten years? Does the home work for the life you're likely to have, not just the life you have today? Can you comfortably make the payment without needing appreciation or a refinance to bail you out?
And notice the word comfortably.
Qualifying for a mortgage and being comfortable with the payment are two different things. The lender gets an opinion on the first one.
Only you get to decide the second.
We had a listener in New Jersey reach out recently. He owns a home with a 2.99% mortgage and was considering another home roughly $250,000 more expensive at a rate nearly four percentage points higher.
When we ran the numbers, he worried we'd be disappointed if he decided not to move.
We told him exactly the opposite.
If we pencil everything out and your answer is, "This doesn't make sense for my family," then we've done our job.
The goal isn't to sell you a house. It's to help you make the right decision about whether you should buy one.
Running the numbers, figuring out how much cash to put down versus keep in reserve, and deciding whether ownership actually fits your life is exactly what we work through on a Roadmap call.
Stop guessing what you can really afford
It starts with a Discovery Call, a straight conversation about your real numbers. Josh and his team show you the price range and loan options that fit, and map out every step to closing. They handle your loan directly, never a referral, so you tour with confidence and write offers sellers take seriously.
For many people, yes, but the monthly payment comparison is only the beginning.
Ownership adds principal reduction, potential appreciation and leverage while fixing the principal-and-interest portion of a fixed-rate mortgage. Renting provides flexibility and can leave considerably more monthly cash available.
If you genuinely invest those savings every month, renting becomes a much stronger financial competitor. In practice, most households don't consistently do that, which is one reason the forced savings built into homeownership matters so much.
They can.
A renter who invests the would-be down payment, invests the full monthly savings and stays disciplined for decades can build substantial wealth.
Zillow's current rent-versus-buy model assumes the renter invests the difference and still finds buying ahead nationally after roughly six years, although renting remains financially superior in some very expensive markets.
The important distinction is between what a disciplined renter can do and what households typically do.
On a $475,000, 30-year mortgage at 6.5%, roughly $5,300 goes toward principal during the first year.
After ten years of scheduled payments, you've reduced the loan balance by about $72,300.
Higher interest rates mean less principal reduction in the early years than borrowers saw when rates were near 3%, but the idea that virtually everything goes to interest is still wrong.
Zillow's current analysis puts national breakeven at roughly six years.
Some relatively affordable markets reach breakeven in about four years. At the other extreme, places such as San Francisco and San Jose currently favor renting even over a 30-year period under Zillow's assumptions.
Your market, purchase price, rent alternative, down payment and expected holding period matter enormously.
We wouldn't start by thinking of your primary home only as an investment with a target return, because it is also where you live.
Historically, the FHFA national home-price index has appreciated around 5% annually since the mid-1970s, but we'd rather model something closer to 2% to 3% going forward and make sure the decision still works.
Leverage magnifies that appreciation. A 2% increase on a $500,000 home is $10,000. If you bought with $25,000 down, that appreciation alone represents a 40% return on your original cash invested in the asset.
When your life needs flexibility.
If you may change jobs, cities, relationships or housing needs in the next two or three years, renting can be a very smart decision. It can also be financially superior in markets where purchase prices are extremely high relative to rents.
In today's market, we don't want you buying because you're 60/40 and afraid you'll miss out. If ownership isn't a strong yes after you've looked at the payment, timeline and trade-offs, keep renting.
Not completely.
The landlord writes the check for the roof, insurance and repairs, but those costs are part of the economics of owning rental property. Over time, landlords try to recover rising expenses through rents when the market allows it.
That doesn't mean a landlord can simply pass through every dollar immediately. Supply and demand still determine what the property can rent for.
The renter avoids the surprise $10,000 repair bill. The trade-off is that the renter gives up long-term control over the housing cost and the property itself.