For generations, buying a home has been seen as the “right” choice over renting. But in today’s market, buying isn’t always the best move.
As home prices rise and mortgage rates remain higher than we’re used to, the price gap between the costs of renting vs buying has widened. An extensive 2023 study by tech platform Cadre found that it costs about 62% more to buy, the widest price gap since the housing market bubble of the early 2000s.
Rather than holding on to outdated ideals about homeownership as the ultimate financial success and American Dream, it’s worth considering renting as a strategic financial decision.
In this article, we’ll explain:
- The housing market shifts that challenge the “buying is best” mindset,
- Five times when renting makes more sense than buying, and
- How to take advantage of real estate investing without owning your home.
The Changing Housing Landscape
Today’s housing market looks nothing like it did just a few years ago. Rising home prices, elevated mortgage interest rates, and tight inventory have dramatically reshaped the rent-versus-buy equation.
Since early 2020, U.S. home prices have surged around 20% faster than rents, according to the Federal Reserve Bank of Dallas, widening the cost gap between owning and renting. Combine that with mortgage rates hovering around 6%-7% (up from 3% in 2021), and the monthly cost of buying has become significantly higher.
In fact, a 2025 Bankrate study found that in all 50 of the largest US metro areas, average mortgage payments are now 38% higher than average rents. In many cities, buyers pay a 50%+ premium to own the same property they could rent for less.
Inventory shortages add more pressure. The US is around 4.7 million housing units short of demand, pushing prices higher and limiting buyer choice. These market dynamics have made homeownership harder to access and less financially appealing in the short term.
The old notion that “renting is throwing money away” no longer reflects the facts. While homeowners build equity over time, so much of today’s monthly mortgage payments go toward interest, taxes, and maintenance, rather than equity.
In today’s market, renting isn’t a fallback. It’s a strategic choice for many Americans seeking flexibility, liquidity, and value.
When Renting Makes More Sense Than Buying
Here are five cases where you may be better off renting than buying.
1. You Might Move Within a Few Years
To unlock any financial benefits of owning vs. renting, you need to own the home long enough for the appreciation to offset your closing costs. Unless you manually add value (like with a fix and flip), it typically takes at least 5-7 years to break even on a home purchase.
If you can’t commit to owning the property long-term, you may be better off renting.
Renting gives you the freedom to upgrade or downgrade easily, change neighborhoods, or even relocate to a new city. It also makes it easier to move in with a new partner or move out if a relationship no longer works.
The flexibility of renting is especially valuable for professionals who may need to relocate for work, digital nomads who prefer to explore different environments, or retirees testing new locations.
2. Your Local Market is Overpriced
If monthly ownership costs (mortgage, homeowners insurance, property taxes, and maintenance) far exceed local rent, you may be better off saving money by renting.
The price-to-rent ratio indicates whether a market is fairly priced or overpriced (potentially even leading to a market bubble). You can calculate the price-to-rent ratio by dividing the median home price by the median annual rent.
A ratio of 1-15 generally favors buying, 16-20 makes renting more appealing, and 21 or more greatly favors renting.
For example, if the median home price in your local market is $600,000, and the median annual rent is $26,400 per year ($2,200 per month), the price-to-rent ratio would be 22.7, giving renting a clear edge over buying.
It’s worth noting that the price-to-rent ratio is generally suitable for comparing homeownership vs. renting, but it doesn’t apply to all real estate investment decisions, particularly when it comes to opportunistic development, value-adds, or non-residential properties.
3. You Don’t Have the Upfront Cash or Emergency Reserves
Buying a home typically requires substantial upfront investment. Between the down payment, closing costs, and immediate renovation work, a $600,000 home could easily cost over $40,000 (make that $140,000 if you plan to put 20% down to avoid private mortgage insurance).
And it’s not enough to just cover those costs. You also need to retain enough in cash reserves to cover unexpected expenses. Even if the property is under warranty, non-home-related surprises, from medical emergencies to car trouble, can create serious financial strain.
Renting keeps cash available for investing, debt repayment, or building a stronger financial foundation.
4. You Don’t Want the Responsibility of Home Maintenance
Owning a home requires spending a certain amount of time, energy, and money to maintain the property. You’re responsible for mowing the lawn, taking care of the plants, touching up paint, preventing pest infestations, updating fixtures periodically, and repairing or replacing systems and appliances as needed. Even just cleaning a large home can be overwhelming sometimes!
If you have a demanding schedule or physical limitations, the maintenance aspect alone could be enough to deter you from buying and make renting the more appealing option.
5. You Want to Invest Elsewhere
Under today’s market conditions, many investors are choosing to rent specifically to free up the resources to invest in out-of-state markets or alternative investment strategies.
We’re seeing this trend across generations. Gen Z is investing in alternative real estate investments rather than trying to absorb the high cost of homeownership. And some Baby Boomers are renting after retirement, preferring to keep more of their assets liquid for easier access to funds and potentially easier transfer to the next generation.
Renting doesn’t mean you’re not building wealth. It just means you’re building wealth outside of your primary residence.
How to Invest in Real Estate Without Buying a Home
Despite the changing landscape in the rent vs. buy debate, there are still many benefits to investing in real estate, including tax breaks, passive income potential, and long-term appreciation. And you can tap into these benefits without being a homeowner. In fact, you may be able to earn higher returns by investing in real estate without buying property at all!
The direct ownership model of real estate investment is great for investors with the time, desire, and capital to purchase and manage properties on their own. But many of today’s investors prefer hassle-free passive investment models that reduce risk while increasing return potential.
Take real estate syndication as a prime example. Real estate syndication allows investors to pool funds to finance a specific property/project. It could be anything from a long-term rental property to a ground-up multi-family development. The entire deal is pre-vetted and managed by a team of real estate experts who sponsor the project, working on behalf of the investors to maximize return potential.
Syndication makes it easy for investors to choose a pre-vetted real estate deal with a low minimum investment amount and fully outsource the management of the investment to experienced professionals for purely passive returns.
Join Gatsby Investment to Access Unique Real Estate Opportunities
Gatsby Investment is a real estate syndication company that specializes in high-return-potential real estate deals in the lucrative Los Angeles market.
We have carved out a unique niche, leveraging changing zoning laws to develop small multi-family buildings on lots formerly reserved for single-family dwellings. Not only has this niche proven to be highly profitable, but it also adds much-needed housing inventory to LA’s tight market, responsibly creating more sustainable growth.
Investing with Gatsby is easy! Simply:
- Create a free account online.
- Choose how you want to invest. We offer several ways to invest, including as an individual, as an entity, or even through a retirement account.
- Complete the accredited investor verification process online.
- Select your project(s) from our available real estate investment opportunities.
- Wire your funds to activate your investment.
From there, you’ll be able to track your investment through our user-friendly online dashboard.
You don’t have to own your home to take advantage of the many benefits of real estate investing. Invest with Gatsby today!