To buy or not to buy… that is the real question for a young millennial trying to figure out their next step in life.  While renting is traditionally the next step after moving out of your parents’ house, is it truly the better option in the longstanding debate of renting vs buying?

There’s a bit of truth in all sayings–including the fact that it’s better to buy.  Buying a house is an investment in your future, and for most people, it is the biggest asset of their lifetime.  It’s an incentive to save every month. There’s the added benefit that mortgage interest payments are tax deductible. Plus, owning a house can also end up having a big impact on your retirement plans.  As Danielle Sette of ERA Justin Realty Co. advises, “Everyone’s financial situation is different, but…when you pay rent, you are paying someone else’s mortgage or retirement. No equity, no gain, no write off. When you buy, you are putting money into your future.” So, isn’t it best to start that investment early? Kind of like maximizing the investment into your 401K right off the bat. Well, yes…and no…

There’s much more to buying a house than just the monthly mortgage:  there’s a down payment, property insurance, property tax, and maintenance costs. Juggling all these expenses can be extremely difficult for someone at the start of their career. Not to mention most millennials are facing crippling amounts of student loan debt and a high cost of living. According to Housingwire, 52% of millennial non-homeowners who wish they owned a home said their income wasn’t enough.

Another big factor that plays into your decision is what you want out of life right now. Are you looking for stability or flexibility? Where do you see yourself in five years? Millennials have become a bit synonymous with the “wanderlust” lifestyle, choosing to spend their money on trips and experiences over material goods. In fact, according to Deloitte’s 2019 Global Millennial Survey, when asked to indicate their ambitions, participants prioritized travel over settling down with 57% of participants saying they want to see the world, 49% looking towards buying homes, and only 39% interested in starting families. This need for flexibility and change transpires beyond their personal life and into their professional lives with 49% of participants saying they would quit their current job in the next two years if they had the choice. Even with a proper income and financial order, this need for flexibility better suits the lifestyle of a renter, and some early buyers find themselves regretting it. Other millennials are pushing these big life milestones to later in life.

When talking to my older friends about renting an apartment or buying a home, the advice they always give is to live with your parents as long as they’ll let you in order to save up as much money as you can. My friends that started renting straight out of college share how hard they have found it to accumulate any kind of savings with their monthly expenses and starter salaries. Both paths though have led to the same trend: buying later and buying bigger. According to USA TODAY, after having to rent or live with their parents for years, Millennials are mapping out a new path to homeownership by skipping the starter home and going straight for larger houses that they can see as their forever home.

Although many factors and trends lean in favor of putting off buying, there are numerous success stories of buying early on:

Courtney Nielsen (ERA Brokers Consolidated): “I have had a few clients in their early 20’s (one was 21 even), and single, buy a condo. They rented out rooms to cover their mortgage. Then three years later, the condo had appreciated in value with almost $70K in equity. Pretty good investment if you ask me.”

Elizabeth Purdy (ERA Key Realty Services): “I closed on my first house when I was 21. I couldn’t quite afford it making less than minimum wage, so I decided on a multifamily, bought a ton of books about landlord/tenant rights, got a roommate, and 10 years later my investment has doubled.”

And sometimes it’s just a numbers game:

Will Henley (ERA Team Real Estate): “I categorize all housing expenses into two categories: money I can get back, and money I can’t. Rent, I can’t get back. Interest on a mortgage, taxes, insurance, etc., I can’t get back. A down payment immediately becomes equity in the house, and any principle payments become equity. If/when I sell the house in the future, I will get all of that money back.  So, if the ‘money I can’t get back’ from renting is less than the total ‘money I can’t get back’ from buying, it makes sense to rent and vice versa.”

So which option wins in the debate of renting vs buying? Perhaps there isn’t one clear-cut answer. However, there is one constant in every equation—you. If you’re currently struggling on figuring out what would be best for you specifically, my advice is to go straight to the experts. Thomas Leemon of ERA Old South Properties said it best, “[Whether to rent or buy is] different for each situation. Some people really should rent. Some could buy. It depends so much on so many specific factors and as agents, it’s our job to realize who is in the position to buy a house or not.” If you’re looking to take that next step in your life, but not quite sure what path to choose, reach out to your local ERA affiliate.