"Everyone should buy a house." You’ve heard it, I’ve heard it. And it is wrong. Worst of all, it perpetuates that idea that renters are somehow “less than” homeowners in our society.To be clear, there is nothing wrong with buying a house in the right circumstances. But it is equally true that renting is often a preferable choice, again depending on the circumstances:
Are there downsides to renting? Of course there are, just as there are downsides to buying. One of the most touted benefits of homeownership is the possibility of building equity. This is because buying a home with a mortgage is a “forced” savings mechanism; with every monthly payment you add to your investment over a period of years without selling. Given that the all-in costs of renting are usually less than owning, a savvy renter will mimic this equity-building feature by consistently investing the difference in cost between owning and renting.Perhaps the more serious downside to renting is that you give up some control, including over the amount of rent that you pay. But bear in mind that the cost of ownership also rises over time...property taxes go up, as well as maintenance costs. And as a renter, you can more easily reduce your housing costs if your financial circumstances change and require you to do so.Renters also let go of some amount of control over their environment...whether or not to paint the wall lavender, for example. For this reason, the decision to buy is often one that is made not with our head, but with our heart; our desire to “feel” ownership over our home regardless of the actual economic benefit. We accept that emotional pull as a reasonable motivation to buy without question. Let’s also accept that the emotions that pull us towards being a renter are equally valid.