“Step on a crack, break your mother’s back.”
“Feed a cold, starve a fever.”
“Cracking your knuckles will you you arthritis.”
These are some classic old wives tales. Are we allowed to say “old wives tales” in 2025? Whatever.
When it comes to your finances, a classic old wives tale is that its ALWAYS better to buy than rent your home.
The truth is…that is untrue. Yea, I said it.
In most big U.S. cities this year, the monthly cost to own is about 38% higher than the monthly cost to rent.
So is renting “throwing money away”? Not if you use the savings on purpose.
Here’s how to decide whether to buy or rent.
1) Know what your city is telling you
Check your price-to-rent ratio. Take the median home price and divide by the annual rent for a similar place.
Under 15: buying often makes sense
16 to 20: depends on your timeline
21 or higher: renting usually wins
It’s usually better to rent in high-cost coastal cities. Parts of the Midwest are more buy-friendly.
2) Time beats takes
Buying only works if you give it time. If you plan on bouncing around every few years, renting makes more sense.
A good rule is you need at least 5 to 7 years to clear transaction costs and let equity build.
If your plans are fuzzy, renting keeps you agile.
Me as soon six months after moving into a new place.
3) Be honest about the real costs
Owning is more than “principal and interest.” Add property tax, insurance, HOA if any, plus maintenance.
A simple rule is 1% of home value per year for upkeep. New roof and HVAC are not TikTok myths; they are (often terrifying) realities.
If you buy, keep 3 to 6 months of expenses in cash after closing to cover unexpected costs.
Renting is simpler. Your big number is the lease payment. Your landlord pays for the burst pipe. You keep your weekend.
4) Use opportunity cost to your advantage
If you rent, invest the difference between what you would be spending on the monthly mortgage and would-be down payment.
Set up an auto-transfer on payday into a diversified portfolio. Make it invisible.
If you don’t invest the difference, the math tilts back to buying.
Run the numbers with this calculator:
5) Rates and timing, without the drama
Mortgage rates have come down from 2023 peaks but are still elevated.
Two things can happen next:
Rates drift lower. Payments fall. Some locked-in owners list homes, which can steady prices. Better buying conditions.
Inflation sticks. Rates stay higher for longer. Renting continues to be cheaper month to month.
You do not need to predict where interest rates are going. You just need a plan that works in both paths.
Your simple decision tree
Will I be here 5 to 7 years or more?
Yes:
Check price-to-rent. If under 20 and you can fund the down payment and still hold an emergency fund, start shopping.
Get two pre-approvals, ask for a float-down option, and budget 1% for maintenance.
No: Rent. Automate investing of the difference and your down payment. Recheck the math in 12 months.
Owning builds forced equity. Renting builds optionality. Pick the one that matches your next five years, then execute like a pro.
So, is buying always better than renting?
Myth, busted.
Those old wives were WRONG.
