Listen up guys, finding a place to call home is one of the most significant milestones of your life. It is a large chunk of time and money that you will invest into this process. There are so many factors that go into finding the place we see as our sanctuary. Without being too broad or too niche, we are going to get into the nitty-gritty of homeownership in 2024. The decision on whether you should rent or purchase a home is obvious to some, but for others, it’s a reality check we need.

Financials

This is one of those obvious factors that shouldn’t come as a shell-shock to any of you. It’s pretty standard for rental communities to require that you earn three times as much as the monthly rent. If you are looking to start a family and settle into a place of your own, you have to be prepared to fork over a few bands up front.

Upfront Costs

When it comes to the money investment when deciding to rent or purchase a home, you have to be brutally honest with yourself. Let’s take a look at the upfront costs that come when you want to purchase a home.

Down payment’s typically cost about 3% to 20% of the home’s total price. Closing costs are fees associated to finalizing the mortgage. Things like appraisals, attorneys, title insurance, and inspections will rack up a hefty closing cost fee.

Now, if you are looking to rent an apartment or condo you still have upfront costs, but very minimal.

The security deposit is a step that a majority of rentals require, a cash deposit upfront. This is typically the same amount as one month’s rent and is paid in addition to your first month’s rent. Once your lease/rental agreement is up, you will get that money back. Just as long as the place is in the same (or better) condition than it was prior to your move-in.

Then there may be application fees, which might range anywhere from $15 to $40. Luckily, they are often credited towards your security deposit when you’re approved. Many rental/leasing offices pay a premium to run background checks and verify income to determine your qualifications.

Ongoing Expenses

Without a doubt, being a homeowner requires routine maintenance. Some of the common shockers that new homeowners don’t plan for are sometimes the most brutal on the bank. When renting, you don’t have to worry about things like lawn service. Owning a home means you need to either hire a service or do it yourself. Purchasing all the tools and equipment is a few grand and hiring a service is close to $150 a pop or up to $800 a year.

When you rent a place, there is a maintenance person or landlord at your service. Need your a/c fixed? Got a leaky faucet? No problem and no charge. That’s their problem. But when you own that leaky faucet or broken a/c, you have to pay to replace and/or service it.

Lifestyle

You never know when life is going to throw you a curveball. If you have a solid vision on the next 10 to 20 years of your life in the same place, a home is a solid investment. Do you have kids or plan on growing a family? Home it is. Are you a single pet parent who loves to travel? Go ahead and look for the apartment of your dreams. This is just the start of determining your lifestyle and how it fits in with the plan to rent or purchase or a home.

Your Career Path

Your lifestyle plays a huge part in whether renting or buying is right for you. Renting offers flexibility—perfect if your career might take you to new cities or if you enjoy changing your living environment frequently. Buying provides stability and a sense of permanence, allowing you to customize your space and settle into a community.

Consider your career trajectory. Job security, potential relocations, and income growth prospects can all influence your decision. 

Family Circumstances and Future Requirements

In the future, you may have to consider renting temporarily, or you may need to stay in one place for the long term, making buying a house the best option.

You could be starting a family or expanding your current one, which means you’ll need more living space. Transitioning from a one-bedroom or two-bedroom apartment to a three-bedroom house might be a decision you make.

Housing Market Trends

Market conditions can also influence your choices on whether to rent or purchase a home in 2024. If housing prices and rental rates are on the rise, you may need to reconsider your budget. With higher interest rates compared to previous years, you might decide to postpone buying a house for now.

Depending on your location, you may choose to continue renting if your landlord doesn’t increase the rent annually. Alternatively, you might opt to move more often in search of a more affordable living situation.

Pros and Cons to Purchasing a Home in 2024

Purchasing a house has the advantage of allowing you to accumulate home equity over time. As you continue to own your home, you will gradually reduce the amount you owe to your lender, resulting in increased equity. Eventually, this equity can be used to secure a home equity loan, and you may also benefit from tax deductions related to homeownership.

Another benefit of buying a house is the sense of stability and permanence it provides. Once you own a home, you can settle in for the long term without the uncertainty of having to move due to a landlord’s decision or property sale.

Another important aspect is the sense of security and consistency. You won’t have to constantly decide whether to relocate each year. Unlike renting, where landlords can raise the rent each year upon lease renewal, your mortgage payments remain stable. Although it’s not guaranteed due to various factors within and beyond your control, it’s common for homes to increase in value over time. This means that your home will likely be worth more after several years compared to its initial purchase price.

Now for the cons. Purchasing a house comes with significant initial expenses, whereas renting typically requires a security deposit and the first month’s rent. Buying a house requires a substantial upfront investment, covering expenses such as a down payment, closing costs, home inspection, appraisal fees, homeowners insurance, and moving costs.

Additionally, ongoing maintenance and upkeep costs become the homeowner’s responsibility, unlike renting where the landlord or maintenance team takes care of such issues. Unlike renting, buying a house limits the flexibility to easily relocate if you are dissatisfied with the current location. It is advisable to commit to living in the purchased home for at least three to five years to make the investment worthwhile.

Pros and Cons of Renting in 2024

One benefit of renting a rental home or apartment is the flexibility it offers. You’re not tied down permanently, so when your lease is up, you can easily move to a new place. If you really don’t like where you’re living, you can end the lease early and find a better option. This flexibility is especially helpful if you’re uncertain about where you want to live or if your job requires frequent moves.

Renting also requires much less money upfront compared to buying a house. Typically, you only need to pay an application fee, a cleaning deposit, or a security deposit (the amount varies by location and landlord), and possibly the first month’s rent. This is a much smaller financial commitment than purchasing a home.

These lower initial costs make it easier to budget and plan for your monthly expenses while renting.

Another advantage of renting is the minimal responsibility for maintenance. If something in your rental unit needs fixing, like the air conditioning or a clogged toilet, all you have to do is submit a maintenance request or contact your landlord. It’s the landlord’s job to ensure that the issue is resolved promptly and to cover any repair expenses.

When it comes to the not so good, similar to owning a home, there are downsides to renting. One drawback is the inability to build equity. Instead of investing in your property, you are simply paying rent to a landlord.

Additionally, as a renter, you have limited control over the property. You are not allowed to make significant changes such as painting or renovating without obtaining permission from the landlord. There may also be restrictions on noise levels and the number of guests allowed to stay.

Another disadvantage of renting is the potential for rent increases. While a landlord cannot raise the rent during your lease term, they can choose to do so when it comes time to renew the lease. Unless you live in a rent-controlled area, you could face higher rent each time you renew your lease.

Tools to Determine if You Should Rent or Purchase a Home

For instance, consider the “rent or buy calculator” on Realtor.com. This tool enables you to input different factors such as your ZIP code, the price you want to pay for a home, monthly rent, down payments, additional expenses, and the return rate on investments. Zillow also offers a helpful calculator, which assumes that if you choose to rent, you would invest your down payment instead. Both calculators also consider the often forgotten expenses of maintenance and upkeep.