The Stability Argument: Buying a Home vs. Renting

On The Monevator, I read about how first-time homebuyers may be paying their mortgage well into retirement.

With their parents’ help, they generally buy their first home around the age of 31, but without any help, it’s around the age of 37.

(P.S. If you are interested in dipping your toe into investing but don’t want to be bored to tears or confused at every sentence, I highly recommend The Monevator. It’s full of British wit.)

In the comments, reader Lemondy wrote:

I think you should buy if you want the stability of owning your own home rather than having the flexibility of renting. A house would certainly be a poor investment for most people (highly illiquid, leveraged, most of your wealth into a single asset without diversity). Long-term trends in house prices and property being a reasonable inflation hedge are all this market has going – maybe that’s enough

I see his (her? :D) point and I don’t disagree with it, except for that little point about “stability” and “renting”.

I do enjoy stability.

In my love life, food choices and what have you.

Save the drama for your mama, I say!

But stability as a good point as to why we should buy a home?

Not sold.

As a renter, and perhaps a die-hard renter for life (who knows? I never say never), I almost feel like the word “stable” means “a ball-and-chain”.

I already wrote about why I rent instead of buying a home here, and why I think homes are not worth their purchase price.

So forget the cost-benefit analysis here for a second, and let’s focus on the word: “stable”.

Why a home is more stable

  • The same place to come home to every night
  • *No fear of being kicked out with your bags tossed into the hallway if you miss your rent payment
  • You pay your set mortgage each month, depending on if you have a variable or fixed interest rate; your mortgage could go up or down

Why renting is just as stable in comparison

  • We pay $769 for an all-inclusive studio in an area where a larger space costs $1600 in mortgage, plus utilities, home maintenance and home appliances, and building maintenance fees.
  • It is also the same place to come home to every night
  • *You can also be foreclosed upon and tossed out into the street if you don’t make your mortgage payments! Or choose to leave on your own accord
  • You pay the market rates, and it usually goes up, but you can always move to bring it back down

I am not trying to argue that buying a home is not stable.

I am just saying that renting can be just as stable if you look at the comparisons being made.

I know people who have lived in apartments for 30 years and counting.

These huge, honking, old apartment buildings are not going anywhere, and they need tenants to fill them.

You can even negotiate your rent with them, if you manage to compare notes with your neighbours and realize you are getting shafted.

Plus, you can get utilities included & live in a very nice area for cheaper than it costs to have a mortgage.

We pay $769 for an all-inclusive studio in an area where a larger space costs $1600 in mortgage, plus utilities, home maintenance, home appliances, and building maintenance fees.

Our old apartment was as big as the $1600/month mortgage, and we paid $1250/month all-inclusive.

Take the $350 difference in the payments and invest it, and it is possible to end up with more money in the end as a renter than a homeowner who’s home’s value may have stagnated at a real return of 0%.

Why the stability of a home can become cumbersome..

What if you have to move suddenly for a job?

Suddenly, being tied down to a “stable” home is not so comforting any more.

Life happens, and things change at the most inopportune moments, even when you wish desperately that it wouldn’t.

Maybe you will be lucky enough to get the company hiring you to pay for the realtor’s fees AND the loss in value of the home just to get you to move, but that’s quite rare, and probably reserved for super elite, pie-in-the-sky executives.

In that case you have two options, neither of which are rosy:

  1. You are stuck selling your home at a loss (you have to pay fees: realtor & moving)
  2. You end up keeping your home & the mortgage, and renting an apartment as well

Of course, I am playing the Doomsday Reaper here, throwing out the worst scenario possible, and it does NOT happen to everyone, but it just happened to someone I know.

I’m sure many of you have been super smart, and made a tidy profit buying and selling your homes.

But as a renter, the flexibility to move any time we choose, on our schedule is worth much more than being rooted to a place.

Case in point: We don’t like where we’re living right now.

The pipes are horribly noisy at night and we’ve made the decision to pack and live in another city for the interim before moving again to our final destination for now (Dallas).

As renters, we’re outta here without a second thought.

Stuff everything into suitcases, pack it all into the car and off we go. La dee dah!

The last time we moved, we even brought furniture with us. We disassembled everything, packed it into the car and moved in 3 hours.

As homeowners, we’d have to mull and ponder over all the nuances of having to pack up our lives, sell our nicely matched furniture, sell the home, pay realtor’s fees and figure out how to make it work.

Second Case in point: My sibling bought a huge mansion in a city.

Now they have to move, because they got a better job in another city.

They are now carrying 2 mortgages, trying to move their stuff out of their old home, pack it into their new home, and then clean up their old home and sell it on the market for the summer.

What if the house doesn’t sell for a year?

My sibling is stuck paying for 2 mortgages. For a year. That’s $2500 for the old home they are trying to sell, and $3000 for the second home they bought, without waiting for the first one to go.

I personally would have moved my stuff into a storage unit, and rented an apartment month-to-month, to sell the first home, before buying a second…. but what do I know? πŸ™‚

I’m just a young, inexperienced, home-shunning 20-something year old girl apparently. πŸ˜›

We are also self-proclaimed minimalists.

We can pack our lives into 3 suitcases and 2 carry-ons each, and we don’t need much space to live in.

It all contributes to our ability to save even more money.

They say that paying for housing can take up to 30% of your net income, and if you can save on such a large fixed payment, it can make a big impact.

But not everyone wants to live like us, and we get that.

We’re just offering a different perspective on renting, and that it can be really awful or really awesome.

So stability as an argument that can apply to everyone, doesn’t fly for us.

We find the flexibility in renting to be more of a benefit than the stability of having been rooted down into one spot because of a mortgage

….and physical asset that we cannot pack into our suitcases & move.

You have to assess the situation for you and your lifestyle

Don’t just assume it’s more stable.

Don’t be swayed by the fact that it’s a home in your name, versus a rented space in your name.

It all depends on the situation.

You HAVE to run the numbers for yourself, your city, your family and your lifestyle(s).

You may find out that you will save money, feel better emotionally, and happier in your own home.

… or like us, you may not.

About the Author

Just a girl trying to find a balance between being a Shopaholic and a Saver. I cleared $60,000 in 18 months earning $65,000 gross/year. Now I am self-employed, and you can read more about my story here, or visit my other blog: The Everyday Minimalist.