Should I Buy Or Rent A House? Compare 20 Pros And Cons

Do you want to know if you should buy or rent a house? This real estate quiz reveals the answer with a financial comparison based on 20 pros and cons.

Should I Buy Or Rent A House

Renting vs. Buying House Quiz Explained

With its 20 real estate questions, the renting vs. buying house quiz determines whether to purchase or lease a household.

Due to property taxes, inflation rates, and opportunity costs, choosing between a rental or acquisition contract confuses house seekers.

But the quiz compares both options for you, pinning down the best choice.

By the way, people who like this quiz also enjoy “Should I Buy or Lease a Car Test.”

Should You Buy or Rent a House?

If the unrecoverable costs of purchasing real estate outweigh the overall rental fees, you should rent a house instead of buying. But if the long-term real estate appreciation rate is positive, buying a house is a better option.

Are More Americans Buying or Renting Houses?

In recent years, the number of first-time homeowners has increased by 3%. In contrast, the number of tenants has only climbed by 2.3%. So, more people prefer purchasing over leasing.

According to Statista, 65.8% of Americans own a home as of 2022. And 34% of the total U.S. households are rented.

How to Calculate if Buying a House Is Better Than Renting It?

Take the value of the house you want to purchase, multiply it by 5%, and divide it by 12. If the outcome is equal to or less than the rent, buying the house is a better option. But if it’s higher, renting is more profitable.

You can also use this free online tool to compare the prices.

What Are the Pros and Cons of Buying a House vs. Renting It?

Buying a house is a profitable long-term investment. Considering the positive appreciation rates and tax savings, owning a household has a higher return on investment over a decade.

But renting a house is a short-term investment. It’s cheaper and more flexible, allowing the tenant to value their financial resources in different markets—in the stock market, for example.

The downside of homeownership is uncoverable and hidden costs, such as mortgage interest, cost of capital, or cost of equity.

The downsides of renting a house are increasing fees, lack of contract security, and delayed gratification (postponed mortgage or cash purchase).

Suggested Quiz: Should I Move Out of My Parent’s House?

What to Consider When Acquiring or Renting Real Estate?

It’s crucial to consider the right factors when comparing buying with renting a house.

Unlike biased views, renting is not always money down the drain. In some instances, it’s mortgage payment that might waste your financial resources.

Here’s what to weigh up before locking in your decision.

Unrecoverable costs

Costs you pay with no associated residual value are unrecoverable. Two examples are property taxes or mortgage interest.

Property taxes

Tax-wise, owning a house in the US costs about $3,719 on average.

Inflation rates

The average inflation rate affects the decision to buy or rent a house. If inflation is high, getting a house with a mortgage is a mistake.

Real estate appreciation rate

The price of real estate changes over time. If you predict a positive change, buying a house is better than renting it.

Opportunity cost

Investing your money in acquiring a household is a missed opportunity in another market. (You could use that money to buy, say, stocks.)

If purchasing a house takes other profitable opportunities away, you are better off without it. Renting, in that case, is a wiser choice.

Psychological aspects

Buying vs. renting a house should not be solely a financial decision. Your lifestyle should also be a key factor.

Similar Quiz: Should I Move in with My Boyfriend?

Take the Quiz for a Quick Customized Comparison

Are you still wondering, “Should I buy or rent a house?” If yes, take our real estate quiz to compare both options in detail.

The buying vs. renting house quiz analyzes your budget, career, plans, and desires to help you make the right choice.

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