The NYT released another article last week on renting vs. owning . On Instagram, the post referencing the article stated “Renting saves you $133,000 over 10 years.” with no context… the comments are quite entertaining. See them here.
Before I continue, I should be clear that I don’t hold an anti-rent mentality. I rented for 13 years (from 2008 – 2021). While living in San Francisco, I paid $1,500/mo for a good sized room in a 4 bedroom flat. This was below market value at the time and I had 3 great roommates that I consider family to this day and if I could go back and do it again, I would. I always viewed renting (and still do) as a means to an end. An appropriate, yet ideally temporary, way to pay for shelter cost.
High prices coupled with high interest rates have raised the barrier to entry for home ownership and yes, renting can in-fact, be cheaper than paying a mortgage, especially in high cost cities (think NYC or SF), but the NYT is either overlooking or grossly undervaluing the (HUGE) opportunity cost of long term renting.
Take a look at this 15-year look back at Denver Metro home values. The blue line represents single family homes, green represents townhomes and red represents condos. The average value of a single family home in the Denver metro in 2009 was $256,095. This same metric today today is $728,927. This is a 285% increase. See a living version of this chart here.
Cheeky Pop Quiz…
Do you think the folks who purchased 10-15 years ago are better or worse off today?
Did those who purchased 10-15 years ago spend BIG money to get into their home and maintain the home over this time frame? (FOR SURE!)
Having purchased a home 10-15 years ago would you guess these home owners have had the chance to tap into their equity to further build wealth…? or pay off other debts…? or put their kids through college… ? (YOU BET!)
Having had the rent vs own conversation with many real estate professionals and friends over the years, I have come across nobody who can articulate and break down the real figures the way a friend of mine, Brady Mullen can. I encourage you to take few minutes to watch this video on the topic. Then check out his full video library breaking down other topics here. Seriously… give these a watch. You’ll come away smarter.
If someone you know should see this, please forward along and if you’d find it helpful to talk through your own real estate goals whether buying or selling let’s grab coffee on me. You can book a chat here.
