These days, many people are experiencing their fair share of financial stress. After all, inflation is still a problem, and higher borrowing costs are making life difficult for consumers. Throw in the generally high cost of housing, and it's not shocking to learn that 74% of Americans are stressed about their personal finances, with 37% describing themselves as "very stressed," according to a CNBC survey from late 2023.
That same survey, meanwhile, found that homeowners feel significantly less financial stress than those who do not own a home. But while it's easy to see why that may be, the reality is that owning a home is not necessarily less stressful than renting. If anything, it has the potential to be a much larger strain on your personal finances.
There's a benefit to homeownership -- but also a downside
When you rent a home, you're really only guaranteed housing for the duration of your lease. Once that lease expires, your landlord could decide to sell their property, forcing you to move. Or, your landlord might raise your rent to a large enough degree that you have no choice but to seek out a different housing situation.
When you own a home, there's more stability. The only person who can decide to sell that home is you, unless you stop making payments on your mortgage. In that case, your mortgage lender could eventually force the sale of your home via foreclosure, but that's a pretty extreme situation.
However, being a homeowner does not in any way mean locking in predictable housing costs. Many homeowner expenses have the potential to rise over time.
If you have a fixed-rate mortgage, your mortgage payments themselves are locked in for the life of your loan. But your property tax bill could rise from one year to another. Your homeowners insurance premiums could also increase -- whether or not you file claims against your policy. And you could have a year when a major system in your home, like your heat, breaks completely, forcing you to shell out thousands of dollars for a repair.
One can argue that from a financial perspective, renting is a less stressful option. That's because your housing costs are locked in for the duration of your lease.
If you sign a 24-month lease where you agree to pay $1,500 a month for your apartment, that home isn't going to cost you more during those two years. As a homeowner, you could face a world of financial surprises during a similar time frame.
Should you own, or should you rent?
Ultimately, owning a home or renting one has the potential to be stressful. If you're not sure which is the best option for you, think about your general life situation.
If you're in a steady job and are getting ready to settle down with a partner and start a family, then you may feel like you're ready for homeownership. If you're new to your career and aren't sure of your next professional move, and you're romantically unattached, then you may want to rent so you can keep your options open.
Also, consider the work involved in owning a home outside of the cost. That alone can be stressful. When you own a home and snow falls, you have to remove it -- quickly. As a renter, that's generally going to be your landlord's problem. You'll need to think about your schedule and the capacity you have for home maintenance.
There's no definitive way to determine whether owning a home is more stressful than renting or vice versa. It may simply be that in the above survey, homeowners happened to have less financial stress. So think about which type of housing situation is best for you -- and which one is likely to lead to more financial stability.
