The long-held belief that homeownership is the primary path to wealth is facing renewed scrutiny. Real estate investor Grant Cardone recently argued that renting is a smarter financial move, a statement that has sparked a significant debate among financial advisors who maintain that owning a home remains a cornerstone of long-term financial stability.
This discussion highlights a critical question for many Americans: in today's economic climate, does it make more sense to buy a property or to rent one? The answer, according to experts, is complex and depends heavily on individual financial circumstances, market conditions, and long-term goals.
Key Takeaways
- Real estate investor Grant Cardone claims homeownership is an expense, not an investment, favoring the flexibility and cost avoidance of renting.
- Many financial advisors disagree, citing homeownership as a reliable method for building long-term wealth through equity and appreciation.
- Historical data shows average home appreciation often outpaces inflation, providing a hedge against rising costs.
- Factors like high mortgage rates, property taxes, insurance, and maintenance costs can make renting more attractive in the short term.
- Experts recommend a thorough personal financial assessment before deciding, considering factors like emergency savings, debt levels, and expected length of stay.
The Argument for Renting Gains Traction
The traditional view of renting as simply "paying someone else's mortgage" is being challenged. Grant Cardone, a prominent real estate investor, has become a vocal proponent of renting, framing homeownership not as an asset but as a significant liability.
In an August interview, Cardone explained his preference for renting over paying a mortgage. He argued that renting allows individuals to avoid a wide array of expenses that homeowners are responsible for, including property taxes, maintenance, repairs, and insurance. By his definition, these ongoing costs make a home an expense rather than a true investment.
Understanding the Full Cost of Ownership
Beyond the monthly mortgage payment, homeownership includes numerous other costs. These can include property taxes, homeowner's insurance, private mortgage insurance (PMI) if the down payment is less than 20%, routine maintenance, and unexpected repairs, which can significantly increase the total cost of owning a home.
This perspective resonates with those who value financial flexibility and mobility. Renting offers the ability to move with relative ease for job opportunities or lifestyle changes, without the transactional costs associated with buying and selling property, such as realtor commissions and closing costs.
Financial Advisors Champion Homeownership for Wealth Creation
Despite the growing conversation around renting, many financial professionals continue to advocate for homeownership as a proven strategy for wealth accumulation. They argue that Cardone's view overlooks the significant long-term financial benefits of owning a property.
Thomas Ravert, a certified financial planner at Pathway Capital, emphasized this point. He told Investopedia that homeownership is a powerful engine for financial growth for the average family.
"From an investment perspective, homeownership remains the single most reliable path to long-term wealth creation for everyday families," Ravert stated.
Appreciation vs. Inflation
According to Thomas Ravert, homes in the U.S. have appreciated in value by an average of 5.45% annually over the long term. This rate is historically higher than the average rate of inflation, meaning property values have generally grown faster than the cost of living, preserving and increasing wealth for homeowners.
Beyond appreciation, owning a home provides other financial advantages. Leslie Beck of Compass Wealth Management noted that a mortgage offers financial tools that renting does not. "A mortgage provides tax deductions as well as growth opportunities, while rental payments do not," she explained. Each mortgage payment contributes to building equity, which is a tangible asset that grows over time.
Mark Stancato of VIP Wealth Advisors offered a sharp critique of the anti-ownership stance, calling it "misleading and irresponsible." He pointed out that renters are subject to market forces beyond their control. Renters must deal with "rising payments, zero return, and no stake in the asset," highlighting the lack of stability and financial benefit in long-term renting.
A Balanced View in a High-Interest Rate Market
While the long-term case for buying is strong, some financial experts suggest that current economic conditions warrant a more nuanced approach. The decision to buy or rent is not always clear-cut, especially when mortgage rates are high.
Luke Harder of Claro Advisors noted that the financial landscape has shifted. In the current high-mortgage rate environment, he says that "renting has become relatively more attractive." When borrowing costs are high, the savings from not taking on a mortgage can be substantial. Harder suggests these savings can be invested in other assets, potentially generating returns that offset the equity lost from not owning a home.
Other advisors caution against an overly romanticized view of homeownership. Landon Tan of Query Capital believes the "benefits of home ownership are overblown," as many people fail to account for all associated costs.
"The idea of home as an investment also encourages people to spend more on home modifications that would never have occurred to them in a rental," Tan said. He advises potential buyers to conduct a "thoughtful analysis" of their personal finances and lifestyle before committing.
Are You Financially Prepared to Buy a Home?
Ultimately, advisors on both sides of the debate agree on one thing: the decision to buy a home is deeply personal and requires a rigorous financial self-assessment. Becoming "house poor"—a situation where too much income is spent on housing costs, leaving little for savings or other expenses—is a significant risk.
Madeline Maloon of California Financial Advisors stressed the importance of financial readiness. She suggested potential buyers ask themselves if they are "ready for the financial burden of owning a home."
Key Financial Checkpoints Before Buying:
- Emergency Fund: Maloon recommends having an emergency fund that can cover up to a year of living expenses.
- Comprehensive Budget: Create a detailed budget to confirm you can afford mortgage payments, taxes, insurance, and maintenance while still contributing to savings and retirement accounts.
- Debt Management: Ensure other significant debts, such as student loans or credit card balances, are under control before taking on a mortgage.
- Upfront Costs: Have sufficient savings for a down payment and closing costs, which can amount to 2-5% of the home's purchase price.
Clark Randall, a CFP with Creekmur Wealth Advisors, added that the intended length of stay is one of the most critical factors. "A longer stay generally makes buying more financially advantageous," he said. With a fixed-rate mortgage, the principal and interest payments remain stable, while rent typically increases over time. However, he noted, "If you expect only a short stay, renting is usually better since you avoid the upfront costs of a down payment and closing."





