Historically, buying a home has been considered the ultimate end goal for renters. However, as the U.S. residential market evolves, more individuals are choosing to rent long-term instead of investing in a forever home.
What is the reasoning for this shift, you may ask? Well, there are several reasons why today’s renters are steering away from homeownership. In this article, we’ll explore some of these reasons and discover why long-term renting is on the rise. Here’s a look at what we’ll cover:
- Why is long-term renting becoming more popular?
- What are the pros of buying a home?
- What are the pros of renting long-term?
What Are the Reasons for Long-Term Renting?
To kick things off, let’s define long-term renting and explain how it compares to homeownership. Long-term renting means choosing to lease properties throughout your life instead of purchasing a home. This could involve staying in the same rental property for decades or moving to a new one each year. Regardless of the specifics, long-term renters are individuals who have no plans to buy a home and are content with the flexibility and lifestyle that renting offers.
So why are people choosing to rent instead of buy? There are many reasons why someone might opt for the renter lifestyle, including:
The rising price of homeownership
When it comes to homeownership, the problem isn’t that renters lack the desire to buy a home– it’s that they simply can’t afford one. According to research from J.P. Morgan, housing prices are expected to rise by 3% in 2025. These rising prices, along with other financial factors like interest rates, property taxes, and maintenance costs, are making homeownership an unattainable feat for many. For renters on tight budgets, the financial strain of owning a home often outweighs the benefits, making renting the more practical choice.
Lower upfront costs
Buying a home goes beyond just the purchase price. It also entails many upfront expenses, including a down payment, closing costs, and moving fees. While these costs can depend on many different factors, they rarely exceed the costs associated with renting. When you sign a lease to an apartment or rental home, you’ll typically only need to worry about an application fee, a security deposit, and the first month’s rent. This lower financial threshold makes renting a more feasible option for those who aren’t economically prepared for the home-buying process.
Avoidance of maintenance and repairs
Dealing with property maintenance and repairs can be a timely and expensive process. However, if you rent a property, this responsibility falls on your landlord or property manager. Unlike property owners, renters don’t have to worry about tending to emergency repairs or preventive maintenance. Instead, their landlord or property manager will front the costs and take care of repairs as needed. This hands-off maintenance approach draws many to renting over buying, particularly those on tight budgets or with minimal knowledge of property upkeep.
Lifestyle flexibility
Lifestyle preferences are another huge factor when it comes to renting vs. buying. The renting lifestyle is perfect for those who want flexibility and the ability to relocate. Whether that means moving to another neighborhood or to a completely new city, renting gives you the freedom and flexibility to uproot your life at any moment. Buying a home, on the other hand, is more of a commitment. Once you’ve purchased a home, it’s not as easy to pick up and move whenever you get the urge.
What Are the Pros of Buying a Home?
While buying a home comes with its fair share of challenges, it also has many benefits. Though it might not be the more affordable or flexible option, owning a home does have certain advantages over renting, including:
Consistent monthly payments
If you’re a longtime renter, you know that apartment prices are always changing. This is what’s known as dynamic pricing, which involves changing rental rates based on seasonality and market demand. While this tactic can benefit a landlord’s bottom line, it can be frustrating for renters looking to lock down an affordable rate. Then, even if they do find something in their budget, their rent can always be subject to change when their lease is up.
Owning a property doesn’t involve as many pricing inconsistencies. If you take out a fixed-rate mortgage, your monthly payment will stay the same for the life of the loan. Though other factors like taxes and homeowners’ insurance might fluctuate, your mortgage payment will remain the same until it is completely paid off. This consistency can appeal to those who value stability and predictability in their finances.
Tax benefits
Tax benefits are another selling point of homeownership. Financing a property may make you eligible for a mortgage interest deduction, allowing you to deduct interest on up to $750,000 of mortgage debt if you itemize your taxes. Additionally, homeowners may qualify for other deductions, such as those related to property taxes, home equity loan interest, or capital gains from selling the property.
Potential to earn a return on your investment
Unlike renting, owning a home is considered an investment. By that, we mean what you put into it, you get out of it. As you pay off your mortgage and care for the property, its value may increase over time. This is what’s known as property appreciation. When your home appreciates in value, you have the potential to earn a strong return on investment if you decide to sell the property. This potential for long-term financial gain is what attracts many individuals to take the leap and invest in a home.
What Are the Pros of Renting Long-Term?
Earlier, we touched on why long-term renting is becoming more popular among U.S. residents. However, we have a couple more benefits worth sharing if you’re considering this route. Let’s take a closer look at what renters can look forward to when renting instead of buying.
Lower insurance costs
When you buy a home, you’re responsible for taking out a homeowners’ insurance policy. Depending on where you live and the type of coverage you need, these insurance costs can really add up. While renters also must pay insurance costs, their monthly fees are typically much less than those of homeowners. On average, monthly renters’ insurance costs range between $15 to $30 a month or $180 to $360 per year. Homeowner insurance costs, on the other hand, average $140 a month or $1,680 per year, according to an article by Lemonade. This insurance cost disparity is what drives many to rent long-term.
Protection from market instability
The U.S. housing market is always fluctuating, which can pose problems for homeowners intending to sell their property. If your motive for buying a home is to receive a high return on investment, you may not always get what you bargained for. Because the housing climate is ever-changing, many consider long-term renting to be the safer option. Doing so saves you from potential financial let-downs and allows you to prioritize other financial goals like building savings or paying off debt.
No property taxes
Another huge financial advantage for long-term renters is not having to pay property taxes. These can be a huge financial responsibility for homeowners, particularly in states with high percentage rates like Illinois, New Jersey, or Connecticut. For renters, no property tax means having one less expense to worry about and more financial wiggle room to focus on other priorities.
Less financial responsibilities
Ultimately, the debate of renting vs. buying a home comes down to finances. Homeownership comes with many more financial responsibilities than renting. If you’re not ready to take on these additional expenses, including maintenance costs, homeowners’ insurance, and property taxes, then you’re probably better off renting. Doing so will allow you to maintain a more comfortable budget and eliminate the financial stress that comes with homeownership.
Find a Long-Term Rental on Apartments.com
The decision to rent or buy a home isn’t an easy one to make. While your goal may be to find a forever home, you may also not be ready for the commitment and financial responsibility of homeownership. This is where long-term renting can be a practical solution. Whether you’re drawn to the flexible renter lifestyle or the fewer financial obligations, long-term renting may be the perfect fit for your current stage of life.
If renting is the best route for you, allow Apartments.com to help you find the perfect long-term rental. Our expansive database of listings and user-friendly search tools make it easy to find a place to call home. Whether you’re looking for a cozy condo, a modern studio apartment, or a secluded single-family home, start your search today and discover what the next chapter holds.
FAQs
Is owning cheaper than renting?
Owning a home can sometimes be cheaper in the long run, but it depends on factors like location, mortgage rates, and maintenance costs. While rent is a fixed monthly expense, owning comes with additional costs like property taxes and repairs, which can add up over time.
Is it smarter to buy or rent a house?
The decision to buy or rent a home depends on your financial situation, long-term plans, and lifestyle. Buying can build equity and provide stability, but renting offers flexibility and fewer upfront costs, making it ideal for those who move frequently or are unsure about settling down.
Is renting really throwing money away?
Renting isn’t throwing money away—it pays for a place to live and provides flexibility. While owning a home can build equity, it also comes with additional expenses like property taxes and maintenance costs. When accounting for these additional expenses, renting can actually be the more financially savvy option, depending on your specific goals and economic standings.
