One of the most common comments I hear from renter and buyers who are weighing their options goes something like this: “We prefer renting. Investing is a better use of our money.”
On the surface, that may sound logical. And to be clear, renting can absolutely be the right choice in certain seasons of life. Flexibility, liquidity, and mobility all matter. But here is the nuance most people miss:
The real comparison isn’t renting vs. buying in theory — it’s renting vs. buying in a specific market, over a specific period of time.
Renting vs. Buying: Theory vs. Reality
In theory, investing instead of buying a home can outperform homeownership. But that only happens when several things align perfectly:
- The housing market you sit out of stays flat or declines
- Your investments consistently outperform that market
- You remain disciplined and don’t interrupt the strategy
Miss even one of those, and the outcome can look very different.
A Real-World Seattle Eastside Rent vs. Buy Case Study
Let me share a real-world example. A buyer went under contract on a home in a Seattle/Eastside community a couple of years ago but ultimately decided to walk away and continue renting. At the time, homes in that neighborhood were selling in the mid–$700,000s. Fast-forward to today: those same homes are now trading in the high $800,000s, even though both the original contract and the current market fall within the post-COVID period characterized by stabilization and recalibration rather than exuberance.
That appreciation occurred regardless of whether someone owned or rented. The difference was: owners participated in that appreciation; renters did not. This is not about regret or blame; it is about understanding opportunity cost.
Today, that same buyer is under contract on a home very close to the one they originally considered. This time, it is a new construction property, with a purchase price in the low $900,000s.
Where Many People Go Wrong in Their Rent vs. Buy Comparison
Many renters compare home appreciation with investment returns. But that is not the real comparison. Here is the more accurate framework:
Homeownership
- Appreciation on the entire value of the home
- Achieved with leverage (often 5–20% down)
- Forced savings through principal paydown
- A built-in hedge against inflation
Renting + Investing
- Returns only on the cash actually invested
- No leverage
- No forced savings mechanism
- Rent that typically increases over time
Real estate is unique because it allows buyers to control a large asset with relatively little cash upfront. When prices rise, that leverage matters.
So… Is Investing Really Better Than Buying?
Sometimes, yes.
But in appreciating, supply-constrained communities, ownership often outperforms renting unless everything goes exactly right on the investment side. This does not mean renting was a mistake. It simply means renting did not capture that market’s upside.
The One Question That Really Matters
When buyers ask whether they should rent or buy, I encourage them to stop looking backward and ask a forward-focused question instead:
If we are having this same conversation two or three years from now, which would feel better—
“I am glad we locked something in,”
or
“I wish we had bought when prices were still lower”?
That question has nothing to do with spreadsheets, and everything to do with long-term goals.
Final Thoughts on Renting vs. Buying
Renting prioritizes flexibility.
Buying prioritizes participation.
Neither choice is inherently right or wrong. The key is understanding your long-term goals, your current circumstances, and what you gain and give up with each decision.
An informed decision, even if it is a hard one, is always better than a comfortable assumption.
Thinking Through Your Own Rent vs. Buy Decision
In higher-end markets like Seattle, Bellevue, Kirkland, and the Eastside, the rent vs. buy conversation is rarely just financial. It is also about timing, access, long-term positioning, and lifestyle alignment.
If you are considering a purchase in a premium or supply-constrained community and want a thoughtful, market-specific perspective — one that goes beyond online calculators — I am always happy to have a discreet, no-pressure conversation. The right decision is the one that supports where you want to be several years from now, not just where the market is today; and to do that, it is important to consider the full picture, not just a single piece of the puzzle.
