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The Daily

Should You Rent or Buy? The New Math.

Dec 1, 2023
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27:38
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David Leonhardt, a senior writer for The New York Times discusses the challenges millennials face in affording homeownership and whether renting is a viable alternative. The chapter explores the pros and cons of renting vs. buying, considering individual circumstances and long-term plans. It highlights the financial benefits of renting and the importance of considering long-term plans when deciding.
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Quick takeaways

  • Renting should not be viewed negatively, as there are several ways in which buying a home can also result in throwing away money, such as broker's fees, mortgage interest payments, costly repairs, and tying up a significant amount of cash in a down payment.
  • The decision to buy a home often stems from an emotional desire to own a permanent residence, but being mindful of the financial implications is equally important.

Deep dives

Renting vs. Buying: The Housing Dilemma for Millennials

Many millennials find it increasingly difficult to afford homeownership due to high interest rates and home prices. The cost of buying a home has become out of reach for many young Americans, leading to the question of whether it's time to reconsider the wisdom of buying versus renting. Renting is often stigmatized, but for most people, giving up on owning a home is the more realistic option. Home prices have not adjusted significantly despite a decrease in sales, resulting in the cost of buying a house being significantly higher than a few years ago. Millennials, in particular, face challenges with lower incomes and less built-up savings for down payments. Renting should not be viewed negatively, as there are several ways in which buying a home can also result in throwing away money, such as broker's fees, mortgage interest payments, costly repairs, and tying up a significant amount of cash in a down payment. Renting offers flexibility, freedom from repair expenses, and the opportunity to invest down payment money in other ventures. Moreover, housing should not solely be seen as an investment, as owning a home brings emotional fulfillment and a sense of identity and stability. In the end, the decision to rent or buy should depend on factors such as how long one plans to live in a particular location and whether owning aligns with their financial goals.

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