The American Dream in 2024: How Renters Can Grow Wealth, Too


One of the more persistent personal finance myths you’ll hear repeated often is “Renting is just throwing money away!” The people who spout this believe that buying a house is the only way to build wealth. Thankfully, it seems that this notion may finally be going the way of the dodo.

According to Zumper’s Annual Rent Report for 2023, 52.7% of those surveyed believe “the new American dream is being untethered to homeownership.” Clearly, these folks have realized the benefits of renting and recognize that taking out a mortgage loan you then pay off over time isn’t the only way to find happiness and financial security. In fact, renting is a perfectly valid way to put a roof over your head — and if you put your extra money to work for you, you can grow wealth.

Renting offers solid benefits

While I am currently preparing to become a homeowner again (and in far better circumstances than the last time I owned a home), I don’t regret all my years as a renter. Renting comes with some pretty sweet perks. For one thing, it’s a lot cheaper than owning a home. The costs of owning are wide and deep, and go far beyond the money you pay a mortgage lender.

You need homeowners insurance, and you’ll have to pay property taxes. You might owe homeowners association fees (depending on where you live), too. But one of the biggest ongoing costs of homeownership is maintenance and repairs. This ranges from the routine and predictable (landscaping, cleaning out your gutters a few times a year, getting your furnace serviced) to the unplanned and often very expensive (like a new water heater or a major plumbing repair). Research from The Ascent found that in 2019, homeowners paid an average of $8,609 more than renters do each year.

Beyond the money savings, renting also offers flexibility — this is the perk I’ve been most grateful for. I spent most of my adulthood in a career that had me moving constantly to gain experience and add to my resume, and if I’d bought and sold homes every time I moved, that would have been a huge net loss to my finances (honestly, even moving so often as a renter was expensive). It’s far easier and cheaper to break a lease than to sell a home.

Buy a house to make a home — not invest

Despite all the extra expenses that come with owning a home, it’s something that many people dream of (believe me, I know, as homeownership is my new year’s resolution). Part of that draw is that when you buy a home, you’re getting an ownership stake in an asset that grows in value in many cases. As you pay down your mortgage, you’re building equity that you can borrow against. And ideally, one day you’ll own your home outright and can sell it at a profit.

More: Check out our picks for the best mortgage lenders

That said, all those additional costs you take on mean it’s better to think of buying a house as giving yourself a stable and secure place to live, rather than making an investment.

How much wealth could you grow as a renter?

Investing in the stock market over a long period can be an excellent way to become rich over time, and there are no maintenance costs or homeowners insurance involved.

If you don’t feel as if owning is for you, but you’re wondering how you might do with directly investing instead, try this. Sit down with some realistic estimates of how much more you might pay if you bought a home rather than rented one. It might take some research to arrive at that figure — start by checking out home listings in your area to get prices, see what the average mortgage rate is these days, and ask people you know how much they pay for expenses like property taxes and homeowners insurance.

If you plug those numbers into a mortgage calculator, you can roughly project your monthly costs as a homeowner. (This won’t include how much you might pay for a new roof in a few years, but remember, those unpredictable costs are what make owning a home such an expensive prospect.)

Let’s say you arrive at a figure of $2,500 a month — but you’re renting for $2,000 a month. If you invested that extra $500 a month and earned a return of just 8% (a conservative estimate; the stock market has averaged annual returns of 10% over the last five decades), here’s how much you could grow that money over time:

Years You’re Investing Cash You Contribute Total With 8% Returns Over Time
10 $60,000 $87,998.84
20 $120,000 $276,902.26
30 $180,000 $685,730.60

Data source: Author’s calculations using Investor.gov.

Yes, you might buy a home and watch its value grow to $685,000 in the time you own it. But you’ll also have to put a ton of money and work into it over that time. Don’t fall into the trap of thinking that becoming a homeowner is your only ticket to financial security. Getting serious about investing may get you there, too.



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