Why Buying a Home Still Pays Off in the Long Run

2006: &nbsp;the start of the housing bubble
2015: &nbsp;10 years ago
2019: &nbsp;just before the pandemic (the last normal years in the market)
2022: &nbsp;when mortgage rates jumped

Renting can feel much less expensive and much simpler than buying a home, especially right now. No repairs, no property taxes, no worrying about mortgage rates – you just pay the bill and move on with your life.

But here’s the part people don’t talk about enough: renting doesn’t help you build your financial future. Meanwhile, homeowners grow their net worth just by owning a home.

So, if you’ve been wondering whether buying is still worth it, the long-term math is clearer than you might think.

Renting vs. Owning: How the Costs Really Compare

Let’s break down one of the key differences between renting and buying. When you rent, your payment goes to your landlord, and then it’s gone. When you own, part of your payment comes back to you in the form of equity (the wealth you build as the value of your home increases, and you pay down your home loan).

So, while renting may seem more affordable now, you have to remember it comes at a long-term cost: you’re not building your wealth. And it turns out, that’s a bigger miss than you may expect.

First American recently analyzed the long-term financial impact of renting versus owning a home. They compared mortgage payments, property tax, insurance, repairs, and maintenance against the equity gained through home price appreciation and paying down the mortgage. And they did that during several different time frames to see if it tells a consistent story: