Most Renters Think the American Dream of Owning a Home Is Dead. Are They Right?

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Sky-high home prices. Limited inventory. Exorbitant mortgage rates.

These are all characteristics of today's housing market. And not shockingly, would-be buyers are getting frustrated. Some are even giving up on homeownership altogether.

A good 57% of renters agree that the American Dream of owning a home is dead, according to a recent Guardian-Harris Poll. And it's easy to see why you might feel similarly.

Now you should know that today's housing market conditions aren't going to last forever. So in time, it could get easier to buy a home.

But even if that doesn't happen, there's nothing wrong with renting a home on a long-term basis. In some cases, being a life-long renter might actually benefit you financially.

More: Check out our picks for the best mortgage lenders

Don't assume things won't improve

A big reason home prices are elevated today is that there's not a lot of inventory to choose from. And the reason there's not much inventory is that many homeowners refinanced in 2020 and 2021 when mortgage lenders lowered their rates significantly. So now, people with 3% mortgages don't want to swap them for loans in the 7% range, which is what buyers are looking at today.

Also, buyers who purchased homes prior to 2020 or during the earlier part of 2022 may be sitting on very competitive mortgage rates. So they, too, may be fairly discouraged from selling.

But once mortgage rates start to come down, homeowners may not be as locked into their properties as they are today. So we could see a nice uptick in homes for sale down the line, which could cause home prices to come down.

Specifically, the Federal Reserve has indicated that it's looking to start lowering interest rates this year. The Fed doesn't set mortgage rates, but when it raises its federal funds rate, borrowing rates across the board tend to follow suit. Once the Fed starts lowering rates, mortgages could become more affordable. And that could lead to more people moving and a general increase in real estate listings.

You're not doomed if you end up a life-long renter

Homeownership is often associated with growing wealth and financial stability. But it's more than possible to do well for yourself financially without being a homeowner.

When you rent a home, you pay a single amount of money each month for the duration of a given lease. You don't have to come up with $3,000 on the spot to replace a broken water heater, and you don't have to pay a snow removal service $150 every time there's a storm.

In fact, if you take all of the money you're saving each month by not having to pay for maintenance and repairs on a property, you could invest it and grow yourself a lot of wealth without having to deal with the hassle of owning a home.

Let's say renting costs you $300 less per month over a 30-year period than buying a home. If you invest that money at a 10% average annual return, which is consistent with the stock market's average, you'll end up with about $592,000.

Granted, you might buy a home for $500,000 that you eventually sell for almost $1.1 million, thereby seeing a similar gain. But to achieve that gain, you're spending a whole lot of money each year on maintenance and repairs. And you're also putting in the work. Maintaining a stock portfolio is something you may find to be a lot less stressful and time-consuming.

It's not shocking to see that such a large percentage of renters today feel that the dream of owning a home is dead. The good news is that in time, housing market conditions should ease. But the even better news is that if you don't end up owning a home in your lifetime, you're not doomed financially by any means. You may even end up coming out way ahead.

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