When I tell people I never want to own a home, I'm met with disbelief and a monologue about the American dream. But I don't believe I'm being financially irresponsible by forgoing this supposedly sound investment opportunity.

By Terri Huggins
April 09, 2021
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Early last month, home-owning friends and I—a renter—both had leaks in our living rooms due to the weight of the snow on our respective roofs. But only one of us was panicked. My friends spent the day stressed, desperately trying to locate roofers that fit their budget and who could fix the issue in a timely manner. Meanwhile, my husband and I spent the day watching The LEGO Movie with our children. That's because all we had to do to fix the problem was put in a call to maintenance, move a bucket or two, and simply wait for the repair people to arrive. That is the beauty of renting: peace.

Even when considering that information, my proclamations to others about how I never want to own a home are routinely met with the same response: disbelief, followed by a monologue about the American dream (the one that I'm supposedly missing out on). The worst responses also include statements about my supposed financial irresponsibility as I skip out on the sound investment opportunity that is home ownership.

But I don't think I'm missing out on anything. In fact, I'm only gaining. Here's why.

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It's cheaper for me to rent.

One of the most common defenses in favor of homeownership are the savings, and I get it. In many situations, mortgage is cheaper than monthly rent payments. To be fair, I do know many homeowners who are paying far less than the $1,000+ I pay per month to rent my condo. However, what the "but it's cheaper" crowd rarely mentions are the property taxes, homeowners insurance, increased utility expenses, and the maintenance that can easily toss an additional $1,000 per month on top of that "but it's cheaper" mortgage payment.

And it doesn't end there. I've watched enough Property Brothers, Love it or List It, House Hunters, and Fixer Upper to know that homeownership is not as much of an investment as it is an expense. It's far from a one-time purchase—and certainly requires more than the once-a-month mortgage payment. Because it's likely you'll want to change something eventually when owning a home, you have to consider the future expense of renovations, which can range from $20,000 to $76,000 depending on what you're renovating, according to realtor.com. Plus, Americans spend nearly $10,000 per year on home maintenance, according to a 2019 study. Many of those expenses end up being unplanned or emergency fixes, making it more difficult to accurately budget monthly expenses.

In addition to saving money as a renter, I simply love the peace it affords me. I don't lose sleep worrying about what unexpected home expense might arise and whether I can fix it and still adhere to my budget. Renting, for me, provides a different type of financial freedom that home ownership can't give me.

It's not always the best investment.

Homeownership is often touted as the safest investment you can make. However, it may not be the best or smartest investment. According to Zillow, the average return on that investment is only about 8 percent—and that's after you live in the home for seven to 12 years. Given closing costs, insurance, etc., you're not even likely to break even on your investment until you live there for about two to three years.

While I don't anticipate leaving my neighborhood any time soon, a lot can happen with a family in a few years. I like knowing I have the freedom to move freely without having to worry about maximizing my investment. Plus, from my point of view, when a house is your primary residence and you're building memories there, it's not so much a logical investment as an emotional purchase—one that can easily skew your decisions on home-related buys.

And of course, that home doesn't really fulfill its "investment" promise until you sell and get earnings. Until then, owning a house is just an expense that can negatively impact your debt-to-income ratio.

Renting invites simplicity.

From where I'm standing, the freedom and limitless options of home ownership often lead to lifestyle creep—renovations, furniture spending, and generally a more lavish way of living than is conducive to my personal goals to keep things as light and simple as possible. While I absolutely love decorating my home, it's so much easier to manage when I only have to focus on a small, defined area. Plus, knowing this space isn't "mine" to fill with unnecessary things keeps my impromptu shopping sprees at HomeGoods within a reasonable range.

Plus, the inability to knock down walls at the first moment something unsightly catches my eye forces me to find joy in what I have rather than spending my time obsessing over small home imperfections. For me, living in a rental with limited options frees up valuable mental space that is much better allocated to all the other important facets of my life—not to home-related appointments and expenses. Renting makes it so much easier for me to live in peace.

There are other ways to build wealth.

The importance of building wealth, especially for me as a Black woman, is not lost on me. But owning a home is not the end-all, be-all of creating a positive personal net worth. Homeownership has long been one of the key ways to acquire generational wealth. Yet, red-lining, pay inequalities, and other issues of accessibility make homeownership especially difficult for people of color. That's why I make every effort not only to invest (outside of the real estate market) but also to diversify my portfolio—to make sure my family is not missing out on any gains that could have been made from homeownership. Life insurance policies, ETFs, IRAs, 401(k)s and more are what I'm using to invest and create generational wealth.

Though homeownership is not for me, I do acknowledge the amount of freedom, potential tax benefits, and even the pride it can provide. The ability to buy a home can be a big part of someone's success story should they choose it. But with every bit of success comes new responsibilities—and for me, the responsibility of homeownership is one I don't want. It would simply create new burdens and affect my ability to live peacefully. And if something costs me my peace of mind? Then it's too expensive.

Skipping out on homeownership isn't depriving me of the great American dream; it's helping me subscribe to my own version as I invest in my future as I see fit.