Is Buying Better Than Renting?

Buying a home is one of the most significant financial decisions you’ll make, and for many, it’s a choice that offers lasting benefits over renting. Whether you're a first-time homebuyer, looking to upsize to a larger house, or downsize, owning a home can be better than renting in many ways.

According to 2024 Zillow research, about two thirds of renters (69%) say they are considering moving in the next three years, or might consider moving but are not sure when. For this group, about half (56%) say they intend to save up enough for a down payment or to buy a home outright. 

With these trends in mind, we’ll explore the financial and emotional reasons why buying might be the better choice for you.

Build equity to invest in your future

When you rent, you're paying into someone else's investment but when you buy, you're investing in your own future.

Equity is the difference between your home's value and what you owe on it. Each mortgage payment you make builds more equity, which is like putting money back in your pocket instead of your landlord's. Essentially, it’s a powerful way to build long-term wealth.

While buying a home may come with upfront costs, like a down payment or closing fees, your mortgage payments go toward owning an asset, which can appreciate over time.

Homeownership can be a smart investment

Your home is more than just a place to live; it’s an asset that appreciates over time. Real estate values traditionally rise, making homeownership a potentially safe and long run investment. For example, if you purchased a home for $200,000 and the market value goes up to $250,000, the value of your home has increased by $50,000. The appreciation of your home is currently 2.5% ($250,000 minus $200,000 equals $50,000; and $50,000 divided by $200,000 equals 0.25.)

Combined with leverage (the ability to buy a property with a relatively small down payment), the potential for returns is significant.

When you rent, every payment benefits your landlord's bottom line. Contrast this with owning your home, where your wealth grows as your home gains value.

Enjoy stable housing costs

No more rent hikes or moving expenses. With a fixed-rate mortgage, your monthly housing costs stay consistent.

One of the biggest advantages of buying a home is stability. Rent prices often increase annually, forcing you to relocate. When you own your home and have a fixed-rate mortgage, while as a homeowner you’re responsible for property taxes, insurance premiums, and maintenance, the bulk of your monthly housing payment doesn’t change. This stability can provide you with peace of mind and financial predictability.

As your earning power grows, and with stable housing costs, you’ll have more room in your budget to save for:

• Retirement
• Major purchases like a vehicle
• College funds for your kids
• Emergencies or unexpected expenses
• Home renovations or improvements

Be your own landlord

Say goodbye to landlord restrictions and lease agreements. When you own, you're the one in charge. Renting often comes with limitations. You may not be allowed to have pets, modify the property, or even paint the walls the color you’d prefer. 

Homeownership, on the other hand, gives you complete freedom to create a space that reflects your personality and meets your needs.

Want to adopt a dog, start a garden, or knock down a wall to create an open floor plan? When you own your home, the decision is yours.

Gain tax benefits as a homeowner

Buying a house comes with financial perks, especially during tax season. Homeowners might qualify for a range of tax breaks, including:

• Mortgage interest deductions
• Property taxes
• Points paid on your mortgage
• Energy-efficient or smart home improvements

These deductions can save you a significant amount of money each year, making homeownership even more appealing.

Freedom to customize your space

When you own your home, you have the freedom to personalize it to your liking, from minor tweaks to major renovations. Whether you’ve been dreaming of a modern kitchen, a luxurious bathroom, or that perfect shade of paint for your walls, you can do whatever you want. Your home is your canvas. Make it uniquely yours.

Reach a milestone

Buying a home is a significant milestone that offers a sense of accomplishment and personal fulfillment. It’s a place where you can plant your roots, raise a family, and create memories. Plus, your home becomes a lasting legacy that you can pass on to future generations, providing them with financial security and a place to call their own.

Owning a home also fosters a sense of community, which a 2024 Zillow survey supported. According to the research, 55% of buyers considered a sense of community or belonging as very or extremely important. Thirty-six percent of buyers also reported wanting a community that offered shared amenities like a clubhouse, fitness center and playground. Many neighborhoods offer opportunities for homeowners to enrich their lives through local events, supporting schools, and friendship.

Potential for rental income

Turn your home into an additional source of income. If you own a property, you have the option to rent out a portion of the home, like a basement or spare room, or even the entire home. This rental income can help offset mortgage costs or be put toward other financial goals.

Take the next step toward homeownership

Owning a home offers financial rewards, stability, and the freedom to create a space that’s uniquely yours. From building equity and creating long-term wealth to enjoying stable housing costs, the benefits of buying far outweigh renting for many.

If you’re ready to make the leap, start your home-buying journey today with Zillow. Connect with a Zillow Premier Agent partner who can guide you through every step and help turn of buying a home.

Your dream home could be closer than you think.