Rent vs. Buy: Why Scales Tip Toward Renting (but Not Always)

When Susie Figueroa, 42, and her husband bought their bi-level three-bedroom home in Portage, Ind. for $135,000 five years ago, they did so believing that it would serve as a mandatory savings vehicle. Recent events have tested that belief.

The number of households renting an apartment or house rose by 3.4 million between 2004 and 2009, according to "The State of the Nation's Housing 2010," a report from the Joint Center for Housing Studies at Harvard. The Midwest saw the largest rise, with renters increasing by 13.4 percent. And with the fast-declining housing prices nationwide, it is easy to see why so many people argue that there is just no guarantee of increased value when one rents, leaving it unknown as to whether real estate will ever be a safe investment again.

Susie Figueroa disagrees. "We believe that we are investing in our future, as well as our kids," says Figueroa, an administrative assistant in downtown Chicago. She and her husband, William, 45, an executive security officer for a bank, have two children, ages 20 and 23.

Three months ago when they refinanced from a 30-year mortgage with a 6 percent interest rate down to a 15-year mortgage at 4.5 percent, the Figueroas learned that their home's value had increased to $155,000. "The appraisal was done before replacing the central air and furnace," she says. Although they spent $7,200 on the upgrades, with Indiana rebates and federal tax deductions it only cost them about half that. They've also replaced the hot water heater, rugs, garbage disposal, sump pump and appliances, and they painted.

All the maintenance that comes with owning is what has some renters saying that they will opt out of buying a home, in the old rent vs. buy debate.