"Why Buy a House? Invest in Stocks Instead"... 1.2 Million More 'Young and Rich' Opt for Renting in the U.S. Over the Past Decade

Median Price of Single-Family Homes in the U.S. Reaches Five Times Household Income
In All 50 Major Metro Areas, Rent Costs Less Than Buying
30% of Americans Aged 18 to 34 Say "Unlikely to Buy a Home Soon"

Analysts have found that an increasing number of young, high-income earners in the United States are choosing to rent rather than buy homes, investing their extra funds in stocks instead.

Photo for article understanding. Pixabay

On September 2 local time, the U.S. business outlet MarketWatch reported that “the way Americans accumulate wealth is changing, even though homeownership has long been the symbol of success and stability.” Instead of buying a home and gradually paying off a mortgage, some are choosing to remain tenants, investing not only the difference between rent and the cost of owning, but also the lump sum they would have allocated for a down payment into financial assets.

This shift is largely underpinned by housing prices that have outpaced incomes. According to the Harvard Joint Center for Housing Studies, in 2024, the median price of a single-family home in the United States was five times the median household income, widening from 4.1 times in 2019. Between 2019 and 2024, home prices surged by 48%, while household incomes rose just 22%. The median home price has surpassed $400,000 (approximately 543 million KRW), and the 30-year fixed mortgage interest rate hovers around 6.6%.

As a result, renting has become a way to save on living expenses compared to owning. According to an analysis published in July by Realtor.com, a real estate information company, in all 50 major U.S. metropolitan areas, the monthly rent for a comparable property was lower than the monthly cost of homeownership. The median monthly rent stood at $1,695 (about 2.3 million KRW), while with a 10% down payment and a 30-year fixed-rate mortgage, the monthly cost of ownership—including taxes and insurance—was $2,553 (about 3.47 million KRW), creating a difference of $858 (about 1.17 million KRW) every month.

"Financial Plans Based on Lifelong Renting"…Increase in High-Income Tenants

Accordingly, more high-income earners are opting to remain tenants rather than purchase homes. Data provided by the same center to MarketWatch shows that, over the past decade, the number of renter households with annual incomes of $175,000 (about 237.9 million KRW) or more increased by 1.2 million. This group falls within the top 20% of U.S. income earners, with about 59% of these households headed by individuals aged 25 to 44. Earlier analysis by The Wall Street Journal also found that the rental rate among households with annual incomes exceeding $750,000 (about 1.0185 billion KRW) rose to 10.5% between 2018 and 2022, the highest level since the mid-2000s.

Across the broader population of young adults without homes, the timeline for home buying is being pushed back. According to Gallup surveys aggregated for 2025–2026, 30% of non-homeowners aged 18–34 said they were “unlikely to purchase a home in the near future,” more than double the 13% reported in 2013 and 2015. Conversely, the proportion who said they expect to buy a home within ten years increased from 27% to 41%, indicating a trend toward postponement rather than abandonment of homeownership.

The outlet also introduced the case of financial planners Natalie and Dan Slagle, who live in Oregon. After losing out to higher bidders on two occasions, the couple gave up on buying, and now pay $4,000 a month in rent (about 5.44 million KRW). They invest the $2,000 (about 2.72 million KRW) difference between expected mortgage payments and actual rent into retirement funds and stock accounts. “We designed our financial plan on the assumption that we will rent for our entire lives,” Natalie explained.

The Math Only Works with Continuous Investment of Surplus Over 30 Years

S&P 500 Index Displayed at Trading Center in New York, USA Reuters Yonhap News Agency

Equities are emerging as the preferred alternative asset for accumulating wealth instead of real estate. According to calculations by Aswath Damodaran, professor at NYU Stern School of Business, the total return of the S&P 500, with dividends reinvested, outperformed real estate returns both over the recent 10- and 50-year periods, and over the long run since 1928. However, this comparison does not account for the value of living in a home, or differences in taxes and maintenance costs.

Still, the combination of renting and investing in stocks is not always advantageous. In a model by Mark Zandi, chief economist at Moody’s Analytics, which assumes 4% annual home price growth and 8% annual stock returns for the period from age 35 to 65, a homebuyer would own a house worth about $1.1 million (approximately 1.495 billion KRW) by age 65, while someone investing rental savings would have about $1.13 million (about 1.536 billion KRW) in financial assets. Zandi noted that, “for a tenant to build up comparable wealth, they must invest the surplus every year for 30 years without interruption, and refrain from withdrawing funds even when the stock market falls.”

Such a strategy is only viable for a limited segment of the population. According to the Federal Reserve, 23% of renters fell behind on rent at least once last year. While this rate was just 5% among households earning $100,000 (about 136 million KRW) or more, it soared to about 33% among those earning less than $50,000 (about 68 million KRW), revealing significant income disparities. MarketWatch cautioned, “This approach only works if you have stable income and can consistently invest the surplus savings from rent over the long term,” emphasizing, “it is not a universal alternative to homeownership.”

This content was produced with the assistance of AI translation services.