Though homeownership has long been the benchmark for achieving the American Dream, a growing number of people are opting for a more flexible living situation. A third of renters are choosing not to buy a home, even though they can afford one, according to a January 2024 Entrata survey.
Bernadette Joy is one of those renters. “I can afford to pay for a home in cash and I’m still not buying,” she said.
Bernadette Joy, founder of Crush Your Money Goals
Viva Tung/CNET
A money coach and CNET Money Expert Review Board member, Joy has bought (and sold) three homes over the years. After trying homeownership and real estate investing, she and her husband recently decided to unload all their properties. Looking back, she realizes they made the mistake of buying a home in 2013 out of obligation, not because they actually wanted one.
“I got a job. I got married. So the next step was to buy a house. That’s what you’re supposed to do,” Joy said.
Now, without the pressures of homeownership, the couple is happily renting by choice.
As many households are priced out of an unaffordable housing market marked by high mortgage rates and steep home prices, lifelong renting is becoming more common by default. But Joy’s story reflects another side of the equation — an increasing percentage of renters who enjoy the freedom of not being property owners.
Renting isn’t a bad thing if it fits your lifestyle better than owning a home. I spoke to Joy and asked about her backstory, her decision to rent and advice for others who are considering homeownership.
Don’t let today’s housing market rush you
“If you’re gonna live here for the next five to seven years, take your time and find the right place.”
If you’re set on homeownership, a realistic timeline based on your household budget and personal needs is key. In a seller’s market with a ton of competition for homes, buyers often take the plunge based on outside considerations, not because it’s actually the right time for them.
A lot of people rush into buying because the market is hot and homes are going so fast, said Joy.
Since the pandemic, home prices have skyrocketed and inventory has stayed low. Homes aren’t listed for long and sellers are still getting well over the asking price in some areas. Even with current mortgage rates averaging between 6.5% and 7.5%, there’s pressure not to miss out.
Because people think they’re making a good investment, they buy a home that’s overpriced and overvalued, said Joy. Instead, it’s better to ride out market fluctuations and rent until you find the home that best suits your situation.
“If you’re gonna live here for the next five to seven years, take your time and find the right place,” she said.
Read more: Should You Rent or Buy a Home?
Don’t give in to societal pressure
Though buying a home is a solid long-term investment, the pressure to be a property owner can push people into making risky decisions, said Joy. The narrative is that you have a lower social status if you’re a renter, she added.
“I see way too many people going beyond their means and buying a home for the sake of impressing other people, not because it actually fits or meets their family needs,” Joy said.
During the pandemic, Joy and her husband bought a home in the suburbs. But after some time, they realized they didn’t need a 2,400-square-foot home and could make do with half the space. And they wanted to live in a different city, where they later realized their housing needs had changed.
Though Joy had at some point felt a societal burden to become a homeowner, she now loves telling people she’s a renter who is economically secure. It’s counterintuitive, she said.
“I’m financially independent. I have $1.6 million dollars of net worth and I rent.”
Don’t underestimate homeownership costs
Although Joy can afford the expensive housing market right now, she’s not actively looking to own a home. The average home price where she and her husband live — and where they love to live — is around $700,000, and she hasn’t found the right place to buy. So she’s renting for $2,600 a month, which is cheaper than the estimated mortgage and homebuying costs in the area.
Like many other financial experts, Joy recommends you commit to a 20% down payment in your homebuying budget, even though it’s a lot of cash to come up with. If you’re set on buying a home with a low or zero down payment option, that probably means you’re living paycheck to paycheck and don’t have a lot of wiggle room if something goes wrong.
The “all-in costs” of homeownership are often overlooked. A down payment, closing costs and a monthly mortgage payment are hardly the only homeownership expenses — there’s also home insurance and ongoing maintenance. Joy notes that insurance costs have gone up for many of her clients, and that cost-of-living adjustments from state to state can be startling.
In Joy’s case, home maintenance was an added time and money responsibility that she and her husband weren’t interested in managing.
And she’s not alone. According to the Entrata survey, nearly a quarter of renters don’t want the responsibility of owning and maintaining a home.
“You have to reasonably be honest with yourself about what you’re able to maintain,” said Joy, who prioritizes travel, entrepreneurship, dance class and other activities. “Maintaining a home is very low on my list.”
After factoring in the costs that come with owning a home, there are other financial responsibilities to account for in your overall budget, such as student loans, credit card bills, car payments and basic necessities. Just because the bank says you can afford a home loan doesn’t mean you can actually afford it on a day-to-day basis, said Joy.
It’s also important to account for any unexpected events or emergencies that might affect your ability to cover your monthly housing costs. “If you lose your job or something happens, you’re really in a bind,” she said.
Don’t be in a rush to buy a home
Joy and her husband don’t have a new timeline to buy a home. For now, they enjoy living within walking distance of what they love.
“If we find a place and it like makes sense, both mathematically and emotionally, where we are in our lives, then we’ll buy it.”
In the meantime, she’s happy to lend advice to clients and others who are on their homebuying journey. Her first tip is to find a real estate agent who isn’t pressuring you to make the decision. Joy was surprised to find an agent on YouTube who told viewers not to waste their money because it wasn’t a good time to buy. “I’m immediately like, I trust this guy because he’s not trying to sell me,” she said.
Next, Joy tells her clients to pretend as though they’re paying for a mortgage and covering all their living expenses at least half a year before they actually buy. If you’re on a consistent budget months before you move, you’ll have a more realistic understanding of what you can afford.
And even in that case, you need a minimum contingency fund of three months. “If you’re using every single last penny to buy this home, you’re not there yet. You still have to have a cushion,” Joy said.
Though many economically marginalized households simply don’t have enough income or savings to buy a home, the societal value placed on homeownership is also undergoing shifts. As more renters actively opt for financial freedom over owning property, they’re also making conscientious decisions about saving for retirement, paying down debt and partaking in new experiences.
If a money expert is perfectly fine with renting because it fits her lifestyle, you can be, too.
“There is no shame in being a renter for however long you need to,” Joy said.
Read more: Don’t Rush Homeownership: Build Savings and Enjoy Life
