Housing Costs Are High Across the Board—But the Grass Is Greener for Renters. Here Are Eight Reasons Why.
Despite the double whammy of record-breaking home prices and elevated mortgage rates, you’ve just closed on a home. (Congratulations?) Get ready: Now come the bills. According to the Wall Street Journal, costs like property taxes, homeowner’s insurance, utilities, and HOA fees are climbing—and for many homeowners, they exceed the cost of a monthly mortgage payment. As you sit in your new home and monitor your rapidly depleting bank account, you might find a traitorous thought creeping in: I miss renting.
“If you’re pining for the (relative) affordability of renting, you’re not alone: Homeowners are increasingly sticker shocked,” says Jonas Bordo, CEO and cofounder of Dwellsy, and coauthor along with Hannah Hildebolt of Everything You Need to Know About Renting But Didn’t Know to Ask: All the Insider Dirt to Help You Get the Best Deal and Avoid Disaster (Matt Holt, August 2023, ISBN: 978-1-6377439-2-8, $21.95). “Owning your own home is supposed to be the American dream, but it can feel like a nightmare when you’re struggling to keep up with the associated bills—many of which are significantly more costly than you anticipated.”
To be fair, renting isn’t exactly cheap. According to a report from Harvard, the number of cost-burdened Americans is the highest it’s ever been. Asking rents in many markets have been driven up by increased demand, lack of inventory, inflation, high interest rates, and more.
“Landlords have to deal with the same skyrocketing costs that homeowners are contending with,” Bordo notes. “Rental properties don’t get a pass on property tax and insurance rate hikes. For most landlords, there’s little choice but to pass those costs on to the renter, either in the form of increased rent or added fees.”
So, uh…where’s the good news? Is there any?
“There’s no secret strategy or magic bullet—other than pure luck—that will help you find quality housing of any kind significantly below market price,” says Bordo. “Yet, all in all, renting is often a better deal—plus, it’s a better fit for the way many Americans live and work.”
If you’re on the fence between buying and renting, here are eight reasons why leased grass might be a bit greener:
Renting helps you save money…and every little bit helps! While asking rents are high in many markets, they aren’t rising like home prices. In fact, median asking rent for many rental property types hasn’t changed dramatically in the past year, and inventory is increasing.
“At a basic level, some types of rental properties will almost always cost less per month than owning a home,” Bordo notes. “There are few cities where a single-family home in good repair costs less than an apartment with the same bedroom count. Plus, renters typically have fewer recurring expenses. For instance, some maintenance tasks and repair costs are usually covered by landlords, and renter’s insurance is often far less expensive than homeowner’s insurance.
“We’ve all heard that owning a home is good for building wealth,” adds Bordo. “And yes, some people do sell their homes for more than they paid. But often that profit isn’t enough to make up for—much less exceed—the amount the homeowner paid for property taxes, maintenance, improvements, insurance, etc. Also, consider that over the years or decades they owned the home, they may have had less money in their pocket…because it was all going into the house.”
You’re not tied down. Let’s say you get your dream job offer, but it’s in another state. If you’re a homeowner, there’s a long slog ahead. Selling your house might involve expensive repairs and inconvenient showings. Finding a buyer might take months, and—even with that much-hyped equity you’ve built up—there’s no guarantee you’ll come out on top financially.
“As a renter, you won’t have to deal with any of that,” says Bordo. “You can usually tell your landlord you’re leaving and work things out by paying some extra rent, even if your lease isn’t ending soon. If it is, all the better—no extra rent necessary.”
You’ll find lots of cool places to live. In many areas, renters have more choices in terms of geography and aesthetics. For instance, your rent budget might get you a quirky little space in a historic downtown building, a trendy new apartment in a complex, or even a bedroom in a house-share. Homeowners often don’t see this kind of variety within their price range.
“Recently there’s been a material uptick in the delivery of new rentals, especially apartments, so your choices are expanding even further,” says Bordo. “Many of these new complexes offer amenities homeowners typically don’t enjoy, like pools, tennis courts, and on-site gyms.”
It won’t hurt your social life, either. Especially if you live in an apartment complex or rental community, you’ll have plenty of neighbors to connect with. In many cases, management might even sponsor activities like happy hour, game night, or trivia to help you meet them.
“There’s a certain ease to hanging out with fellow residents,” points out Bordo. “If you want to watch a movie together, borrow an ingredient, or meet a friend to vent about a stressful workday, just walk down the hall or climb a few flights of stairs. On the other hand, if you have to leave the house and drive somewhere, it might seem easier to doom-scroll social media instead.”
Your (rare) spare time is really your own. If you’ve never owned a home, you might not realize just how big of a time-suck it can be. In addition to keeping the interior (relatively) clean, you are responsible for unclogging the drains, mowing the lawn, pulling the weeds, cleaning out the gutters…and the list goes on. For every new season, there’s a new to-do list of tasks.
“Sure, homeowners can outsource these jobs—but that’s one more expense,” points out Bordo. “And wouldn’t you rather spend your free time focusing on your hobbies, hanging out with friends, or just relaxing than raking leaves or dealing with the rodent infestation in your attic?”
No need to become an amateur handyma…er, handyperson. As mentioned earlier, hiring someone to fix your leaky faucet or install your new ceiling fan costs money. Thus, many homeowners find themselves watching YouTube tutorials so they can complete these tasks themselves…and then watching more tutorials to fix the mistakes they made the first time.
“When you’re a renter and you need something repaired or installed, the steps are simple,” says Bordo. “One: Pick up the phone. Two: Call your landlord. Voilà!”
Your lease is a big asset (yes, really!). All renters must sign a lease, and on that lease is a clearly defined list of costs, fees, rules, and responsibilities that you and your landlord must abide by. That may sound onerous, especially if don’t agree with all of your landlord’s rules, but it also protects you if your landlord doesn’t live up to their side of the bargain.
“Homeowners don’t have that kind of safety net,” says Bordo. “If you buy a house only to find that the previous owners installed cheap carpet over a rotting subfloor, too bad! You’d better hope you have good insurance. If the same thing happened in a rental, your landlord would probably have a legal duty to fix it.”
Finally, you’re in good company. When asked how she stays humble, Emmy-winner Ayo Edebiri quipped, “I’m still renting.” Furthermore, self-made Seattle multi-millionaire Tori Dunlap commented that not buying a home was “one of the best financial decisions I ever made,” citing flexibility, location, her lack of home-repair savvy, and the ability to diversify her investments. (And since Dunlap’s business centers on financial and investing education for women, her word carries weight!)
“These two women represent a significant number of, shall we say, comfortable Americans who have chosen to ditch the successful-people-own-their-own-homes script,” says Bordo. “The next time someone questions why your name isn’t on a property deed, remind yourself that ‘making it’ and ‘mortgage’ are not synonymous!”
“The calculus for choosing where to live has changed tremendously in recent years,” concludes Bordo. “Affordability, availability, flexibility, and quality of life are all factors that have changed the way Americans approach the homeownership-versus-renting debate. More than ever, renting is emerging as the better option for many instead of the lesser option.”
About Jonas Bordo:
Jonas Bordo is the coauthor, along with Hannah Hildebolt, of the book Everything You Need to Know About Renting But Didn’t Know to Ask: All the Insider Dirt to Help You Get the Best Deal and Avoid Disaster. He is the CEO and cofounder of Dwellsy, the free residential rental marketplace that makes it easy to find hard-to-find rentals. Prior to cofounding Dwellsy, Jonas was a senior executive at several leading real estate firms including Essex Property Trust and BentallGreenOak, and was with the Boston Consulting Group after graduating with his MBA from the University of Chicago Booth School of Business.
About the Book:
Everything You Need to Know About Renting But Didn’t Know to Ask: All the Insider Dirt to Help You Get the Best Deal and Avoid Disaster (Matt Holt, August 2023, ISBN: 978-1-6377439-2-8, $21.95) is available from major online booksellers.
About Dwellsy:
Dwellsy is the renter’s marketplace: a comprehensive residential home rentals marketplace based on the radical concept that true, organic search in a free ecosystem creates more value than the pay-to-play model embraced by all of the current rental listing services. Dwellsy has more than 14 million residential rental listings—more than any legacy classifieds site—as well as the most diverse set of listings, including single family rentals, condos, and apartments. Dwellsy’s entirely different approach to residential rental listings focuses on presenting houses and apartments based on features renters need and want, not based on how much landlords pay to show their listings. Dwellsy investors include Frontier Ventures, Ulu Ventures, Blackhorn Ventures, Heroic Ventures, and the University of Chicago. For more information, please visit our newsroom or find your next home at Dwellsy.com.
