Why I Will Never Buy a Home

Millennials only own 4% of the real estate value in the US. At the same stage in life, baby boomers owned 32% of the country’s real estate value. 

We’ve all heard the stories: straddled by student loan debt, underemployed in a recovering economy, skyrocketing housing prices. It’s no surprise millennials own less real estate than our baby boomer counterparts did at our age. It seems homes are less affordable than ever.

Like many other millennials, I will never be able to buy a home.


Edit: I will never be able to buy a home.

The reason I will never buy a home has nothing to do with student loans, the economy, or the increasing cost of living. I will never buy a home because it’s much more lucrative not to. Wait, what? “But a home is a great investment!” No. It’s not. Also, by avoiding purchasing a home, you can instead have FREE rent.

Alright, hear me out.

The median sales price of a home in the US was $346,800 in Q4 2020.

Not many people can afford to pay cash outright for a home. However, hypothetically, let’s say you did. You just wrote a check for $346,800 and it’s yours. BAM. Well… even though you own the home without a mortgage, there will still be some monthly expenses. 

The nationwide average property tax rate is 1.11%, which would amount to $3,849 per year, or $321 per month on this median-valued home. We’ll leave out homeowner’s insurance since it’s (usually) not required if you own the home, and we’ll leave out the other costs associated with homeownership for simplicity sake. 

Okay, so here you are. You put down $346,800 of your hard-earned money and you still have to pay $321 per month. That doesn’t sound too bad though. $321 is pretty damn cheap rent. 

But you said it would be free!”

Getting there…

The historical average return of the S&P 500 is 7% (even after adjusting for inflation). Investing $346,800 at 7% would yield $24,276 per year, or $2,023 per month.

So instead of putting all that money into a home (that you still have to pay for every month!), you can invest the money and have your investment earnings cover your rent!


Can I rent an equivalent home for $2,023 per month?

Most data on rent around the country looks at 1- or 2-bedroom apartments, so I had to do some of my own digging. I went over to Zillow and did a “For Sale” search and a “For Rent” search in my area. I searched Austin, TX for all homes for sale under $346,800. There were 46 results (at time of writing).

When I searched for homes for rent in the same area for less than $2,023 per month, there were 72 results. So there are actually more options available for renting with these numbers, and the properties were equivalent in size and location. 

So versus having to fork over $346,800, and continue paying $321 per month after that, you could invest the money and essentially live rent free!


But I don’t have $346,800 in cash!

That is a hefty amount and very few people can just write a check for $346,800. If you can, I’m super happy for you!

But I was mostly trying to make a point: buying is not always a better option, and you’re better off making your money work for you.

Also, if you buy a home with a mortgage, then you’re slowly putting that $346,800 into the home. Instead, you can slowly put that $346,800 into your portfolio until it covers your rent 🙂

Sound crazy? Let me know your thoughts in the comments below!

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