Renting vs Buying a Home: How to Decide

Making the housing decision requires careful consideration of both the financial and non-financial impacts, and the way that they interact with each other. There is no universally right way to approach housing. In many cases, contrary to conventional wisdom and societal pressure, renting is a better option than owning, both financially and from the perspective of subjective well-being.

Referenced in this video:

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[sronis]

That last sentence is the most important one IMO: the best advice here is not what's better financially, but what works best for your lifestyle. Thanks!

[mikesirilla]

I do not comment on videos often but this was absolutely brilliant. Some of the best and most thought-provoking content I've seen on YouTube! Great job, Ben!

[treyshaffer]

THANK GOD YOU MADE THIS! I love how much you emphasize that rent is NOT throwing money away. I can't tell you how often I hear that parroted.

[AdamPflug]

I think the biggest thing missing from this analysis are the transaction costs for home ownership - average homeowners sell well before paying their home off, and when you account for closing costs it's very hard to come out ahead in the housing market (even ignoring the opportunity costs and maintenance costs) unless you hold the asset for longer than most home buyers will.

[FitnessFAQs]

Well researched and articulate presentation, great work.

[User-opnr]

Im 100x happier after purchasing a home. Hanging a picture on a wall you own vs a wall someone else owns brings a certain satisfaction that is hard to describe.

[jaimehurtado]

Whenever someone talks to me about anything related to finance, I immediately recommend them to your channel. As always, brilliant. Thanks, Ben!

[stephen]

Such great content! I'm a high school economics teacher and I'll definitely be sharing the ideas presented with my students. Content like this can literally shape and change the lives of people, leading to much more stress-free and happier outcomes. Lots of people watching this video learned this lesson the hard-way, and content like this allows young people to make truly informed decisions as they work their way through life. Keep up the great work!

[seand]

Great video. I decided to stop getting stressed looking for a house to purchase in today's market. An apartment will give me much needed peace at this time

[robinimpey]

Watching Ben Felix is like going out for lunch with a friend, it always increases happiness! I ❤ Ben's holistic approach to wealth management.

[JoipPhumn]

I absolutely love how Ben has been blending decisions for financial planning seamlessly with decisions to maximize happiness. Great work!

I watched this end to end listening carefully, even though the decision to own or rent is one I made nearly a decade ago. The tie ins to happiness decisions were too enlightening to skip!

[xvx]

See my problem is I've moved like 12 times in the last 15 years so the sheer amount of money I've spent on movers has been insane. Plus crappy landlords make you need to move even more frequently. Ultimately I understand that renting CAN be a better option for some, but there's something to be said for choosing what gets repaired, when, and how well it gets repaired. Plus being settled down building equity and having a consistent mortgage payment vs having rent constantly increase can stabilize your expenditures.

[alexperoff-investingessent]

Funny, I just bought a home too. I know crazy market. But I believe I went into it with the right mind set. I've been renting for basically all my adult life and have been benefiting from the opportunity cost of equity invested in the market. In fact I don't think I would have been able to finance a house unless I did invest for so long. I think I've benefitted a lot from renting, but lately the neighborhood I live in has just gotten worse and my neighbors are extremely noisy. I see my house purchase as a purchase of peace, quite, and some good sleep. Great video Ben! And I support all you renters out there!

[daviddegea]

Great video! It reminds me of all the good reasons that keep me renting. Most of my friends and certainly all my close relatives own their homes, and every time the topic pops up everyone look at me and say "Do you have plans for buying? Why not? You could pay a mortgage with that rent." There's no way to turn these misconceptions to people in morgage debt because it'd prove them wrong. And to be honest, sometimes I question myself.

But then I remember I live in the perfect place for me and my family, and pay a monthly rent of only 0.18% of the estimated price of the property, and that puts a smile on my face.😊

[edwardmauer]

What's really crazy is how in some parts of the world, such as many parts of Asia where I spend most of my time, rental yields are like 1-2% of the purchase price. It makes absolutely no financial sense to ever own instead of rent with those numbers. Yet, people here always still feel compelled to own anyway because of how important it is culturally, and because property is seen as pretty much the only place to park your money here. Stocks and bonds aren't really very popular in these places.

[FrequencyModulator]

I remember having a talk with my friend in 2016. He bought his house in Mississauga for 765k with a downpayment of ~100k. I had about the same money invested in a B&D portfolio. Now his house costs ~1500k and my equity is nowhere near that (despite regular monthly deposits on this investment account, that is managed by a very well known company for a fee of 0.35% per year).
And btw, back then I was also thinking that "how much the houses can still go up? It doesn't make sense!", but they did.
What I want to say is that in the big Canadian cities there's no logic (or I don't see it) when it comes to housing. For some reason, houses here always go up. We'll see what the future brings.

[Alice_Walker]

One of the main reasons I choose to rent over buy is that I live a 25min walk/10min tram ride from my job in the city. To buy at a anywhere near the same price I'm renting my commute would be more than an hour both ways. I am not willing to give up ten hours + of my life every week. Those hours allow me to exercise, read, spend time at art and music events (that I am also a ten minute tram ride away from). It is far more preferable to me to save well for my retirement and "invest" in my mental health and happiness now. I am also close to great services like world class hospitals here which would not be the case if I bought. I also get by fine without owning a car which saves me a lot of money. My quality of life would be much lower if I bought a home. My only concern with home ownership is having a stable place to live in my elderly years.

[MikeAzul]

The first part of the video was so eye opening. Thanks for summarizing all the research you've done on these psychological, sociological, and economic studies. It was very eye opening indeed

[Wesleyanite]

This is a must watch video for renters and would-be homebuyers. Excellent analysis and explanation.

[anthalamo]

One aspect that wasn't really touched on is that purchasing a home using a mortgage gives you access to a tremendous amount of leverage, which a typical investor in stocks would not have access to. Even with moderate increases in housing values, that leverage can make an enormous difference in the overall return. That said, the same is true in a market downturn.