Is Renting Cheaper than Buying in 2025?

You’ve probably seen the headlines: “Renting Is Now Cheaper Than Buying in Every Major Metro.” Or maybe you’ve heard friends say they’re holding off on buying a home until rates drop or prices come down. It’s a common narrative in 2025 — and on paper, it even looks logical.

But there’s a deeper story here. Because while today’s cost comparisons make renting look like the safe, affordable choice, history tells a different story. A long one. One where homeowners — not renters — end up building wealth, security, and freedom.

Buying a home isn’t about scoring a deal this month. It’s not about timing a market bottom. It’s about planting your flag somewhere and letting time do the work.

In this article, we’ll walk through why real estate is not a short-term move — and why the buyers who stay focused on the long game almost always come out ahead 

Homebuying Is a Long-Term Decision — and That’s the Point

In 2025, the math is clear: in most parts of the country, it’s cheaper to rent than to buy a home. That fact is being repeated in headlines, newsletters, and podcasts like a market warning. And while the numbers aren’t wrong, the framing often is.

Buying a home is not a trade you make based on this month’s rate sheet. It’s a long-term decision — one rooted in stability, ownership, inflation protection, and wealth creation over decades. This isn’t day trading. It’s more like Warren Buffett’s buy-and-hold strategy. And just like Buffett says, “The stock market is a device for transferring money from the impatient to the patient.” The same is true in real estate.

A mortgage isn’t a monthly subscription you cancel when the market turns. It’s a commitment — and ideally, a launchpad for long-term growth. Most experts suggest that buyers should plan to stay in a home for at least 5 to 10 years before selling. Why? Because homeownership comes with upfront costs — closing costs, maintenance, potential renovations — that don’t make financial sense if you’re flipping in 18 months.

Renters, by contrast, live year to year. No roots, no leverage, no appreciation — just flexibility. That’s not a bad thing, especially if your life or career is in flux. But it’s an entirely different mindset.

Buying is a decision you make based on where you want to be — physically, financially, and emotionally — five, ten, even thirty years from now. If you treat it like a stock pick, you’ll get stock-pick results. But if you treat it like a long-term position, the upside becomes generational.

Renting Is Cheaper in 2025 — For Now

The current landscape looks like this: in many U.S. markets, it’s over $800/month cheaper to rent than to buy. According to Realtor.com, the average cost to buy a typical home is $2,697/month, compared to $1,845/month to rent the same type of property. That’s the largest gap in more than 50 years, and it’s driven by two major forces:

• High mortgage rates: Many buyers are seeing rates north of 7% in 2025.
• Elevated home prices: Inventory remains tight, and construction hasn’t caught up with demand.

It’s easy to look at those numbers and freeze. To think, “I’ll wait until it’s cheaper.” That impulse is understandable. But it’s also short-sighted.

So yes — monthly payment comparisons favor renting today. But that’s a snapshot. A moment. A monthly math problem in a game that plays out over decades.

Rates can fall. Prices can flatten. Rent can rise. And in many metros, they will — quickly and without much warning.

Renting Has Been Cheaper Before — and Buyers Still Won

This isn’t the first time the cost of buying has outpaced renting. It happened in the early 1980s when mortgage rates hit 18.6%. Buyers were terrified. Owning a home meant locking into sky-high rates with no guarantee of inflation cooling. But even then, those who bought — and held — saw explosive long-term gains.

It happened again in 2006 during the height of the housing bubble. Buyers were warned that prices were unsustainable and a crash was coming. They weren’t wrong — values dipped significantly after 2008. But those who stayed in their homes didn’t lose. They recovered. And in many cases, their homes doubled in value by 2020.

The same narrative reappeared in 2022–2025. Home prices had already soared post-pandemic, and then mortgage rates doubled in under two years. Fear took over again: “It’s too expensive. I missed the boat.” But here we are — prices have held firm, inventory is still tight, and many buyers who jumped in anyway are sitting on strong appreciation.

Real estate has a pattern: fear chases people away at the exact moments when buying makes sense for the long haul. In hindsight, the buyers who pushed through doubt and discomfort always come out ahead.

In real estate, time in the market beats timing the market — just like in investing. That’s why we say real estate rewards the patient, not the perfect timer.

Think Like Buffett: Real Estate Isn’t a Meme Stock

Warren Buffett isn’t scanning Reddit for the next short squeeze. He’s looking for undervalued assets he can hold for decades. He’s playing a different game — one based on long-term value and compounding returns. That’s what real estate is for most buyers.

Buffett often talks about the idea of owning productive assets — businesses that generate cash flow, grow in value, and serve a fundamental need. Housing meets all those criteria. A home gives you a roof over your head, a hedge against inflation, and an asset that tends to appreciate over time. Like owning shares of a company with a solid balance sheet, owning a home means you're positioned to benefit from long-term economic growth.

If you wait for a perfect deal, you’ll likely never buy. But if you buy a good home in a solid area, even when it “feels” expensive, time does the work for you.

In 2020, buyers feared they were buying at the top — and for good reason. The COVID-19 pandemic had thrown the world into chaos. Lockdowns, job losses, supply chain breakdowns, and fears of a global recession created a climate of economic uncertainty unlike anything in recent history. Many believed the housing market would crash, similar to 2008, or that it was irresponsible to buy a home when the future felt so uncertain. But those who moved forward anyway — despite the fear, despite the noise — saw home values rise by over 40% in just two years. Their courage to buy during a moment of collective hesitation turned into one of the greatest periods of wealth creation in modern real estate history.

In 2022, rates jumped and the narrative flipped: “Now it’s too expensive to buy.” But prices never truly dropped — they plateaued. And now? They’re inching back up while buyers wait on the sidelines.

Buffett's approach isn't about trying to outsmart the market day to day — it's about putting your money into something you believe will be worth more in 10, 20, or 30 years. That mindset is a perfect match for homeownership. It’s not about reacting. It’s about holding. And those who hold tend to win.

Waiting for the market to "get better" often just means watching it run away from you.

Boomers Bought Anyway — And That Made Them Millionaires

In the 1980s, mortgage rates were sky-high. Home prices climbed year after year. And yet, the largest wave of buyers in American history — the Baby Boomers — bought homes anyway.

They didn’t have perfect conditions. They had inflation. They had recession fears. They had war, political uncertainty, and volatile job markets. But they also had a long-term mindset.

And they were right.

According to Federal Reserve data, the median net worth of homeowners in the U.S. is 40 times higher than that of renters. Boomers built that wealth not by flipping homes, but by buying them, living in them, and letting time and appreciation do the rest.

From 1984 to 2024, the average U.S. home price has grown by over 500%. If you look at a long-term home price chart, the trajectory is clear: prices may wobble in the short term, but over the course of decades, real estate moves in one direction — up. The graph below, which spans from the mid-1980s to today, shows exactly why so many Boomers who bought during periods of high rates still ended up with outsized wealth. They didn’t panic when prices dipped or rates rose — they held, paid down their loans, and let time do the heavy lifting. If you bought a $100,000 home in the mid-80s, it might be worth over $600,000 today — even more in markets like Austin, Dallas, or Houston.

Rates Could Fall. Prices Might Rise. The Math Could Flip Fast.

Here’s where things get interesting: today’s affordability gap could vanish quickly if mortgage rates fall by even 1-2%.

Let’s say you’re looking at a $400,000 home. At 7%, your payment might be $2,800/month. But if rates drop to 5.5%? That same home could cost just $2,300/month. Suddenly, owning looks a lot more attractive — and the rental market gets tighter too, as demand shifts.

And if you’re renting while you wait for that moment, guess what? Prices may rise in anticipation. The springboard effect is real — when affordability improves even slightly, buyer demand surges, inventory dries up, and prices spike again.

Trying to time that perfectly is tough. But owning now, even at a higher rate, lets you refi later and stay ahead of that curve.

Final Thought: Long-Term Thinking Wins

There’s no denying it: in 2025, renting looks cheaper on paper. But homeownership is never just a math problem — it’s a mindset shift. A five-to-ten-year plan. A launchpad for building equity, stability, and generational wealth.

Real estate isn’t day trading. It’s not something you dip in and out of based on charts and interest rate forecasts. It’s a long game — and the people who understand that always win.

You’ll often hear that "the best time to buy is when you can afford it." And that’s not just a comforting platitude — it’s reality. Buying your primary residence isn’t always about hitting the absolute best financial return. It’s about finding a home you love, a neighborhood that fits, and a lifestyle you’re ready to build into.

If you can afford a home that supports the life you want — and you plan to stay for the long haul — that’s a win. You’re locking in stability. You’re building equity. And you’re stepping into a long-term wealth strategy that simply isn’t available to renters.

Even if it doesn’t feel like the “deal of a lifetime,” buying a home you’re proud to live in for years to come can be one of the best decisions you ever make.

If you want to discuss the long term approach to homebuying, give us a call at 512.881.5099 or get in touch with me by completing this quick form, and I'll be in touch as soon as possible.