---
title: 'Should You Buy or Rent in 2026? (The Numbers Shocked Us!)'
source: 'https://youtube.com/watch?v=ybvxWRS_BgY'
video_id: 'ybvxWRS_BgY'
date: 2026-08-04
duration_sec: 2318
---

# Should You Buy or Rent in 2026? (The Numbers Shocked Us!)

> Source: [Should You Buy or Rent in 2026? (The Numbers Shocked Us!)](https://youtube.com/watch?v=ybvxWRS_BgY)

## Summary

This video from the Money Guy Show analyzes whether it is financially better to buy or rent a home in 2026. The hosts present data on home prices, mortgage rates, and affordability, then run a detailed case study comparing a homeowner and a renter over 12 years. They conclude that in the current market, renting may be the better financial choice for many, but emphasize that the decision is personal and depends on individual circumstances.

### Key Points

- **The Buy vs. Rent Debate** [00:38] — The hosts introduce the topic, noting that buying a home has traditionally been seen as part of the American dream, but the housing market has changed significantly.
- **Median Home Price in 2026** [02:50] — The median sale price of an existing home in February 2026 is just under $400,000, with a sharp increase post-pandemic.
- **Current Mortgage Rates** [04:09] — Current mortgage rates are around 6.4% for a 30-year conventional loan, up from historic lows after the pandemic.
- **Impact of Interest Rates on Payments** [05:26] — For a $400,000 home with 5% down, the monthly principal and interest payment is $1,600 at 3% interest but $2,400 at 6.4%, a 50% increase.
- **Housing Affordability Calculation** [07:14] — Using median income of $85,000, median home price of $391,000, and 6.1% interest, the median monthly total payment is $2,926, which is 41% of median income, far above the 30% threshold.
- **Renting Costs** [08:13] — The national average rent is $2,000 per month, plus rental insurance averaging $13, totaling around $2,100-$2,200. 50% of renters spend more than 30% of income on housing.
- **Rent Increases Over Time** [09:13] — National average rent increased 6% (2020-2021), 8% (2021-2022), 6% (2022-2023), 4% (2023-2024), totaling a 31% increase over four years.
- **Renting Cheaper in All Top 50 Metros** [10:38] — In 2020, renting was cheaper than owning in all 50 largest US metros, and the gap has widened since.
- **Mortgage Payments vs. Rent** [12:11] — On average, mortgage payments are 38% more per month than rent, compared to only 18% in 2010.
- **Case Study: Heather vs. Randy** [14:16] — Heather buys a $343,000 home with 5% down, total upfront costs $22,000, monthly payment $2,900. Randy rents, upfront costs $850, monthly payment $2,200.
- **Heather's 12-Year Outcome** [17:09] — After 12 years, Heather's home appreciates to $435,000, she spends $455,000 total, builds $166,000 equity, and her monthly payment rises to $3,100.
- **Randy's 12-Year Outcome** [18:17] — Randy invests the difference, earns 8.5% average return, spends $357,000 total, builds a portfolio worth $198,000, and his rent rises to $2,700.
- **Comparison Results** [18:59] — Heather spent $100,000 more, but her total wealth ($166,000) is $30,000 less than Randy's ($198,000), and her monthly cost is higher.
- **Randy is the Clear Winner** [20:09] — Despite societal pressure to buy, Randy comes out ahead in this scenario, but the hosts note that this is unique to current conditions.
- **Metros with Widest Rent-Buy Gap** [21:19] — Cities like San Francisco, New York, Los Angeles, and Boston have a huge premium for buying, making renting more attractive.
- **Metros with Narrowest Gap** [22:25] — Phoenix, Orlando, Columbia, and others have a smaller gap, making buying more reasonable.
- **Key Variables to Consider** [23:32] — Location, market heat (days on market), economic influences, and quality of life are crucial factors.
- **Redfin's Buy vs Rent Calculator** [25:04] — The hosts recommend using Redfin's calculator to compare rent and purchase prices, adjusting for property taxes and other costs.
- **Non-Financial Considerations** [26:00] — Questions like 'Would I live here if I could work anywhere?' and 'Is this where I want to raise a family?' are important.
- **When Buying Makes Sense** [28:10] — Buying may be better if you have a family, value stability, have remote work flexibility, or can afford the premium.
- **When Renting Makes Sense** [29:19] — Renting is better if you're early in your career, value flexibility, or live in a high cost of living area with a high ownership premium.
- **Financial Triage: Upfront Cash** [30:23] — Ensure you have enough cash for down payment, closing costs, furnishing, and moving before buying.
- **Time Horizon** [31:03] — If you can't commit to staying for 5-7 years, renting may be better; if you plan to stay a decade or more, buying could be advantageous.
- **True Monthly Cost** [31:30] — Consider all costs: property taxes, insurance, maintenance, HOA fees, utilities, not just principal and interest.
- **The 3-5-25 Rule** [32:10] — Put down at least 3% (ideally 5% for first home), stay in the house for at least 5 years, and keep monthly housing costs below 25% of income.
- **If 3-5-25 Doesn't Fit** [33:14] — If you can't find a home that fits the rule, consider renting or moving to a more affordable area.
- **Final Verdict** [33:55] — For many, renting is the better financial choice in 2026, but it's personal and depends on individual circumstances.
- **Addressing the Equity Argument** [35:16] — Homeowners often have higher net worth because they are forced to save via equity, but with a 20% premium, investing the difference can be better.
- **Embrace Renting as a Valid Choice** [36:27] — Renting is not throwing money away; it can be a strategic financial decision to build wealth through investing.
- **Future Innovations** [37:11] — Technological advancements could reduce construction costs by 15-30% and speed up building, potentially changing the equation in the future.

### Conclusion

The video concludes that in the current 2026 housing market, renting is often the financially superior choice for many individuals, but the decision is highly personal. The hosts encourage viewers to use tools like the 3-5-25 rule and consider both financial and non-financial factors to make the best decision for their unique situation.

## Transcript

the American dream, but a lot has changed over the past decade and some rent than to buy. >> Brian, I am so excited because today we're actually running the numbers to see if it's financially better to buy or
to rent in 2026 and we'll talk about how to decide which path is right for you. >> So, I'm Brian, he's Bo and we're financial advisors here to help you make housing and with that, let's jump right in.
hot topic on social media for a while. Should I buy or should I rent? Because you've already alluded to this that buying a home and being a homeowner in this country was often considered part and even a necessity to be following the
>> Well, and that's what I worry is that it's become such a part of our societal fabric that you have your parents and your grandparents telling you you got to go buy a house that you it's not that cut and dry anymore. There's a lot
not to say in the long term we still don't love home ownership, but I'm what we're going to give you today is the steps so you can figure out for your personal situation, is it better to buy or is it better to rent at this moment?
hearing those parents and grandparents telling you got to buy, got to buy, got And meanwhile, the housing market's getting crazier. We've had interest rates run up, we've seen the cost of housing increase and so a lot of people,
believe that this is almost an impossible task, something that they if I'm not capable of doing it, well, that just means that I'm destined to not >> Yeah, and this is when I want to make sure that all of my financial mutants
that I we give you the field vision to make the right decision so that you can kind of know what's going on in the economy, what's going on in with you and your personal finances, and you come out on the right side of this and actually
>> So, the question we have right now is, okay, how did we get here, right? Like what what's going on out there? And look at some of these headlines that we've seen. Uh from finance and economics, is it better to rent or buy? Rent versus
buy in 2026, which is cheaper in today's housing market? People should rent, bro, says real estate investor Grant Cardone. There's no real money in owning a single-family home compared to the S&P 500. So, it seems like a lot of people
are uh tooting this horn saying rent, rent, rent, rent. Is that now the to be making? >> Well, I mean, and just just how did we actually kind of level set and talk about where is housing actually at in
2026? Well, check this out. The median sale price of an existing home in February of 2026 is right under $400,000. >> Yeah, but we have to have some context. Okay, well, how does that compare in
relative terms? And if you look at this, this is the median sales of houses in the US from 1965 until now. And you can see that there is sort of like this steady increase. There's this steady run-up, but there is this really, really
unique thing that happened coming right after the pandemic, right after 2020, where housing prices skyrocketed, hitting sort of an all-time high right there in that 2021-2022 timeline.
the visual, cuz I know we have a lot of podcast listeners, too. It is literally the hockey stick. I mean, you watch this thing just spike up. That's why you saw markets a lot of places, a lot of houses went up close to 50% over a 2-to-3-year
period. But you are now, if I'm just giving you the rest of the story, but look how we're still trying to figure out where the market is is because you have seen it kind of cool off, you've seen melt sales prices coming down.
There's a lot going on with this graph. >> Well, so it's not just home prices though. Also, if we actually look at mortgage rates, current mortgage rates right now are around 6.4% for a 30-year conventional loan. And so
again, we have to think about this in the context of history. How did these mortgage rates look to historic mortgage rates? So, according to Freddie Mac via the Fred website, if you go back to 1975 till now, you can see really from the
sort of declining mortgage rate environment. It kind of bottomed out again, right there after the global pandemic, we sort of hit all-time lows on mortgage rates. And now, since the
pandemic, another hockey stick. It kind of jumped right up as soon as we got outside of 2020, 2021. >> Yeah, I mean, we what what a what a haves versus have-nots on affordability is that you see the interest rates were
is that you see the interest rates were the lowest of low right after 2020, but then when we cut the spigot off, I mean, they jutted up to where now mortgage rates went, you know, over 7 and 1/2%. But we're we're coming down. I mean, so
that's why I mean, there's a lot that has happened over the last 5 years, and has happened over the last 5 years, and it's it's crazy to apply old rules to something when you've had such huge changes. And that's what we want to make
sure we educated our audience is you need to know where we've come from so need to know where we've come from so you don't apply old rules to something system because you might find yourself stuck in a bad situation. And if you
want to know how much interest rates matter on this decision-making process, I want you to consider this. For a $400,000 home that you put down 5% $400,000 home that you put down 5% if you had the pre-pandemic 3% interest
asking around the room, there's some people have under 2 and 1/2% mortgage choose 3%. It's $1,600 a month. >> Fast forward that to now to a 6.4%, which is pretty close to where we are
which is pretty close to where we are right now, it's close to $2,400 a month. That means the cost of your principal and interest only has gone up close to 50% just in the last few years.
>> Yep. >> So, the cost of housing has increased, the interest rates have increased, and then there's one other metric that we want to look at, and that's housing affordability. What's the relationship
affordability. What's the relationship to the cost of home ownership relative to income? Like, how much of an individual's income is represented by housing cost? And so, if we kind of just look at this again through time from
2005 until now, and we'll say, "Okay, was the cost of housing greater than or less than 30% of the median household income?" And if it's greater than 30% or on the chart if you're looking at it
right now, if it's orange, we would argue that housing is not incredibly affordable. But, if the cost of housing is less than 30%, we'd say, "Okay, that is an affordable housing era." Well, you can see again, post-pandemic, after
2021, we have been in a pretty unaffordable housing metric. the Federal Reserve's data. Let's actually do our own calculation this." So, we actually took housing affordability in 2026. We said, "Okay,
the median household income for the United States right now, little over $85,000. The median home price in the United States right now, right around $391,000. Interest rates currently, 6.1%.
Median monthly principal and interest payment, right at $2,100. If you take the median monthly total payment, that's principal, interest, taxes, insurance, and PMI, it's right under $3,000. It's $2,926.
So, if you do the math on that, the share of median income is 41%. Now, share of median income is 41%. Now, realize we like 25%. The Federal Reserve was using 30% and here we are showing you just using the current trends of
where median numbers are in the United States, we're at 41%. So, yes, I would say housing to the affordability of buying houses is really low right now. >> Yeah, home ownership is expensive, but in reality so too is renting. So too is
the other side of the equation. If we look right now the national average for rent across the country right now is $2,000 a month. And if you're going to responsible renter. If we look at just the average cost of rental insurance,
it's about $13 a month. So, these costs stack up. You're somewhere between 2,100 and 2,200 dollars on average to pay for rent. Well, when you think about that and we look at the actual data
50% one in two households that rent say that they spend more than 30% of their income on housing. These aren't homeowners. These are people that are renting. So, both of these both home ownership and
both of these both home ownership and renting are pretty expensive right now. okay, let's look at this from an annual basis and then bring it all together cuz when all this got really crazy and sideways. Is we just did year-over-year
national average rent increases and you can see from 2020 to 2021 is about 6% increase. 2022 from 2021 8%. 2023 from 2022 6%. 2024
4%. If you out bring all these together 31% increase. Now, here's what's wild to >> It's a lot. >> But if you can believe it home ownership is even more. I think cuz I told you the stat that housing has gone up close to
50% for most people. If you look at just what interest rates have done, if you look at what the cost and appreciation through this post-inflationary period, it's gotten a lot more expensive. So now this leads to the ultimate question that
we opened this up with. What's better? Is it better to rent or is it better to >> Yeah, what is the better choice? What's the optimal choice? And what's interesting is even though they're both expensive. Homeownership is
expensive and renting is expensive. Under our current conditions, where we Under our current conditions, where we are right now, the delta in a number of markets between buying and renting is pretty
substantial. Pretty significant. Now I would argue significant enough that we >> Well, look, I don't even mind cuz I got to think it's hard to build consensus in variability. I mean, especially United States is huge. So it's hard to say this
check out this stat. It says on average, renting a home was cheaper than paying a mortgage in all 50 of the largest US metros in 2020. of the largest US metros in 2020. >> Say that again. Renting was cheaper than
>> Say that again. Renting was cheaper than owning in every single top 50 US metro. >> Now now look, I get nervous cuz when you say this stuff, people are going to be like, well, I guess that means rent. It's like the headline said. I guess
Hang on. Miss Don't don't mishear it cuz your personal financial situation is going to be very personal. We're going to give you the tools, but we think that groundwork and give you an understanding. I do think that earlier,
remember how I was talking about yes, rent has gone up 30%, but housing's gone up more. There's actually a great chart on this cuz we wanted to show one more piece of data to get you educated on this. If you look at mortgage
affordability versus rent, You can see the separation in the line right here. We did this from 2010 to 2024. The hockey stick is just bigger with mortgage payments, the average mortgage payment, how much it jumped up versus
lot of sense, and I don't mind just telling you guys behind the curtain these houses, they have sub-4% mortgages. They have
They bought these houses pre-2021, so they can give you a more affordable rent than somebody who's actually going out there and setting up a new transaction and buying the house and having to pay the higher interest, pay
the higher purchase price. That's why mortgages are so much more expensive national on the national level, on average, mortgage payments were 38% more per per month compared to
to ask is in relative terms, how does that stack up? Well, if we go back to 2010, 2010, so just 15 years ago, 16 years ago, it was only about 18%. >> Yeah. So, the chasm, the gravity, the
difference between the two is huge. But again, it begs the question, which one is better? Cuz just because renting is cheaper, doesn't necessarily mean it's better, but it does mean if there's a huge gap between the two, we ought to
assess that, we ought to analyze that, we ought to make a wise decision in the current context in which we're living. >> And you know, Money Guy Show, we love a show you, hey, let's actually put some numbers to this because if we're going
the American dream and tell you that rent renting is better, let's at least show you how these numbers play out and how razor thin this can actually come to. You know, a lot of a lot of times,
little bit later, reversion to the mean is a real thing. Is that we've had so much of this has happened in the first five years of this decade that you can't expect that this is not going to have some impact on future. So, we actually
study between Heather the homeowner and Randy the renter, we put that inflation cuz you still got to take into account inflation. But, we we did like 2% on on mortgage you know, we think that homes will appreciate around 2% and I even
think that that might be rosy because if we had houses go up 50% in the first three to five years of this decade, it's easy to see and you could saw it in that a little bit. I don't think you can expect that you're going to make a
gazillion dollars on your house for the next three to five years cuz it's going to kind of level set or reversion to the mean or getting back to some normalcy >> All right, so let's think about these two individuals, Heather the homeowner
and Randy the renter. Both are 35 years old, but they're both going to make unique decisions. Heather decides to buy a home and Randy decides They're both going to go with a three-bedroom house and we're going to
roughly the same. So, let's look at the financial implications of both of these buy a home and it's going to cost a little over $343,000.
She puts 5% down. She's going to put down a $17,000 payment down payment. Her closing costs if we assume 1 and 1/2% of the purchase price is going to be another $5,100. So, in total she has about $22,000
So, in total she has about $22,000 of upfront costs and when we calculate her mortgage payment, so the principal, the interest, the taxes, insurance, PMI, it's going to come in right around $2,900 a month. So, she's got $22,000
out initially and about $2,900 a a month in a monthly in a monthly payment. Now, let's look at Randy. Okay, Randy has to fill out a $100 application fee. Now, look, I know that security deposits are often refundable. We're going to
assume that Randy doesn't take care of the place, so let's just a sunk cost. So the place, so let's just a sunk cost. So his total upfront costs are about $850, and his monthly payment, when we take the average cost of rent for a
three-bedroom, and we add to that the cost of renter's insurance, is going to be about $2,200. So 850 out initially, and a $2,200 monthly payment. Randy is going to end up he's saving close to
$21,453 out of pocket because he's just coming up with a security deposit. You know, think about she was having to come up costs, and all those other things. That's a big difference. There's also
the monthly payment. Randy's cheaper. And now, look, a lot of you are going to be like, "Yeah, but the thing with rent though is it's going to go up over time. Heather's going to be locked in on her mortgage payment, so she'll be A-okay."
we're talking about you got a 20% premium on home ownership versus the rent. There's probably a lot of play that can come from that. remember, Randy, he's going to invest those initial costs, and he's going to
going to assume that they both do this for 12 years. You may be asking, "Okay, why, Brian? Why 12 years?" >> did some math because look, how long do people stay in houses? When we we when we looked it up, the data point came in
right around 12 years. And we're like, "Well, look, these are unique times. Instead of just doing a normal case study where we do 20 or 30 years, I feel representative of what's going on." So we said, "Let's base it on how long
people stay in houses if they did this transaction right now." It's around 12 that 12-year mark. >> All right, so let's look at Heather after 12 years. Remember, Brian's already mentioned that because we came
prices, we're going to assume that her home, the one she bought, is going to increase about 2% per year. So 12 years from now, it's going to be worth about $435,000. And her monthly payment, her principal
and interest would have stayed the same. That's one of the benefits of having a mortgage. Those are locked in. But, the taxes are likely going to increase and the insurance is likely going to increase. And so, we just assumed,
"Okay, what if those also increased at about 2% annually?" So, after this 12-year timeline, Heather will have spent a total of $455,000. But, when you look at the equity she was
able to build in her home over that time, she has about $166,000 of equity. That's how much wealth she has built. And her current payment, when you factor in the increase in taxes and increase in insurance, is a little over
$3,100 a month. >> All right. So, that's There's where >> Yeah, let's check out Randy. After 12 years, we're going to assume that Randy was able to earn 8 and 1/2% on average on
his investments. We just took the wealth multiplier for a 35-year-old. So, the lump sum that he put to work, as well as the monthly difference he put to work. We are going to assume that his rent increased. It also went up at 2% per
year in the market in which Randy lives. So, after 12 years, Randy has now spent So, after 12 years, Randy has now spent a total of $357,000. But, when you look at the value of the portfolio he built up, it's worth over
portfolio he built up, it's worth over $198,000. of those 2% increases, is just a touch over $2,700 a month. So, when we compare these two, what do you see? Well, Heather spent
about $100,000 more. And yet, even though she spent $100,000 more, the total value of her assets, total wealth that she's been able to build, is about $30,000 and her monthly carry cost, what she's
having to spend on a monthly basis to stay in the house, is actually more than >> So, this this is what was so unique to me is that you fast forward 12 years, she's still paying more than he is to be a renter. And then the fact that cuz we
be the winning factor. Well, assuming now look, that's a big assumption, financial mutant. He'd actually have to be investing the difference. But if you're looking at absolute dollar for dollar just matching these, it is
amazing that Randy is going to have close to $200,000 of assets that he's going to be able to have access to to make other financial decisions. $166,000 of home equity, but it's going to be
illiquid. And she's still going to have a mortgage of about $269,000. have maximum flexibility. If you want to know who the clear winner is, I have to say, and it surprises me cuz like I said, in the
societal fabric of America, home ownership is the goal, it's the dream. So, it breaks my heart to say, "Hey, look, maybe this time is different." Who is better off in this scenario? Now, realize, I'm going to give you some
warts on this scenario in a minute, but Randy is the clear winner. >> Yeah, but this changes, right? So, Randy won in this unique scenario, but there are other variables, like what are each of their time horizons? What location do
each one of them live? What are their ultimate goals? It's really, really difficult to say specifically who is the winner in this scenario, and we're looking at it a finite matter of time. Cuz when you play this out over 30
with changing variables and circumstances, it could look very different. What I took away from this is I don't think that either of them are necessarily losers. Both of them were able to build
wealth. It's not like Randy renting put him behind the eight ball. cuz I wanted to really nerd out. If we're going to make these assumptions better do your homework and measure twice. And so we pulled up the 10 metro
areas where rents are very low relative to the home prices. And we've clients, especially out there think about like Silicon Valley, San Francisco and other areas, high cost of living areas where we've known people who have
built wealth in these communities. When they retire, they move away and that's when they actually buy. And look at this chart of these 10 communities where you have a huge gap between the rent versus buy. You're paying a much higher premium
to buy in these markets. Might make sense if I lived in one of these, you know, areas where these metro areas, probably going to just go ahead and not just rent this. >> So, the widest gap, the 10 that are
listed here, San Francisco, Bridgeport, Connecticut, New York, San Jose, California, Los Angeles, Honolulu, Houston, Texas, Seattle, Washington, Providence, Rhode Island, and Boston, Massachusetts. If you live in or near
one of those metros, there's a really good chance that it might make more sense for you to rent than to buy. >> Okay, and then now let's flip the least amount of gap? The narrowest gap between renting versus home ownership?"
one where you might want to hold your nose. Yes, you go pay a premium when you buy the house, but it's closer to the rent than versus home ownership. So, Phoenix, Arizona is number one, Orlando,
Florida is number two, Columbia, South Carolina is number three, Daytona, and Boise, Idaho are tied somehow at number four. Number six is Cape Coral, Florida. Seven is Las Vegas. Number eight is Greensboro, North Carolina.
eight is Grand Rapids, Michigan. And then 10 is Charlotte, North Carolina. >> So, at the end of the day, the decision to rent or buy is a very personal decision for you based on the specifics
of your situation, but also, even though it can be personal and even though it can be based on your unique variables, one of the things that you have to take ignore, even though personal finance is personal,
comes to real estate, and when it comes to whether you buy or whether you rent, the location in which you choose to do that has a huge impact.
you the variables, cuz that's I hate a show that you watch and you're like, situation? Well, this is where the rubber meets the road. Is the first your location and say and do an assessment, how hot or cold is this
market? And an easy way you can, if you need a data point, is go look at how long houses are sitting on the market. You can see days on market to kind of figure out is this a hot market? Is this a cold market? Cuz it is going to vary
>> Another question to ask is what are the other unique economic influences that are taking place? Are there a lot of businesses and a lot of jobs moving into it an area where there are a lot of businesses and jobs moving away from the
area? You want to make sure you're aware of that before you make the decision to area. >> we we we put on here, look, what's the quality of life in your area? Because not all communities are created equal on
quality of life. If you know, if it's true that we're in this new crazy paradigm where robots are going to start doing the work for us and all these other things and we can live wherever we want, if you looked at your community,
is it going to be a net winner from this situation where people are going to move here and regardless of jobs and so forth? Or is this going to be a net account what is the quality of life in this community?
lot of people probably watch this and go, okay, well, how do I know? How do I compare? What's the There are some great tools out there. One that you and the guys found, you found the Redfin's buy and rent calculator. Tell me a little
>> Yeah, so what you can do is you can go and you can use this because you know, these real estate websites will tell you what the rent's estimated rents are going to be based upon how many bedrooms you have, how many bathrooms. And you
can go look at the rent and then this great tool that I I really we played meeting with from Redfin. Then you can look at the purchase prices in there. You can go ahead and do the math, not just, you know, stick your finger in the
to this so you can compare and what I liked about the calculator is when you it would adjust the property tax calculations. It would adjust the the buying. >> Now, but you have to remember, right?
Money is nothing more than a tool that allows us to accomplish the goals that we have. So, we've given you all kinds of like financial metrics and money things to think about, but there are also some non-financial considerations
you want to make when it comes to choosing where you want to live and how questions to ask yourself. If I could work from anywhere, if I were able to go completely remote, would I still choose to be in this area? Or am I only in this
area because I'm tethered to a job that I may or may not be in 5, 6, 7, 8 years >> Well, and because we know that these decisions are much bigger, you know, the the room for error or you to be stuck could be much higher than it's
historically been. So, that's why the next question is is this where I want to of people you buy a house, you instead of this being a 3-year, 5-year, this is type thing because of it's going to take time to smooth out the transaction. You
this where I'm going to be okay with raising the family? And then that leads be my long-term community that I'm actually going to be setting roots in? Brian. A lot of communities are somewhat transient by nature. You think about a
you live there and you fall in love with it, but you recognize if you decide to set roots there, it's a constantly changing population. There are always You want to figure out is that a community that I want to be in? Is that
where I want to set my roots? If it's going to be more of a transient or uh and out. >> we we felt like this was important to because these are non-financial, there's sometimes things are just so big they're
going to impact your life. And the big influences that will overpower analytics is look, if this is where your in-laws live and you know that your spouse wants to live in this area, that's probably going to make some things happen even if
it's financially got some some headwinds to it. The other thing is are there what's called location gimmicks? Meaning is there an ocean in your community? Is there a mountain? Are they These are the things that, you know, you're just going
to be like gosh, I hate I hate that this I'm paying a premium for this, but this going to overwhelm the analytics of my calculation. >> So, if you're standing here at this crossroads trying to decide, let us give
you some tips and some pointers. Home ownership, actually buying the farm, might win, might be the desirable choice if you have a family, especially if you have school-aged children and the school district in which you live
really, really matters. Or it might win if you value stability over flexibility. You want to set roots and you want to be firm. Or if you happen to have a remote
a remote work situation that allows you to live anywhere that you want. I'm not tethered to one geography, one place. That might lean you towards home ownership. Or finally, if you can afford to pay the premium,
even if home ownership is more expensive than renting, but for all of the reasons that we've listed out, that is attractive to you and you can afford it, sense for you. >> mean, if you if you
of life exceeds us and you've done a great job being a financial mutant building up, you might be able to overcome the premium and just hold your the home ownership might win. Let's talk about when renting might make sense. I'm
there. If you're early in your career, and look, you might need some live and just enjoy your journey. I don't want you to be trapped because you made a housing decision that keeps you from living your best life. It's going
to help you out if you have maximum flexibility. So, that's why if you value flexibility and being able to live life on your terms, renting's going to be A-OK in a lot of ways, especially since you're not having to pay the premium to
we kind of already have covered this, but it's worth repeating it. If you live in a high cost of living area where there is a high ownership premium cuz it's much, much cheaper to rent in the area of that because it's such a high
cost of living, then you need to take that into account because we like I said, we have lots of millionaire clients who will build wealth in these don't actually buy their first home until they retire to the lower cost of
living area that they're going to spend in their retirement era. >> Okay, so you've kind of assessed, okay, which one of these camps do I fall into? Now, what is the financial triage I need to think through? What are the financial
considerations? And one of the very first ones, especially on the home first ones, especially on the home ownership side, how much upfront cash do you have? Or if you want to be a homeowner, how much do you need? If all
you're sitting on is your Step One Deductibles Cover, or maybe you're just working through getting Step Four emergency reserves, you're probably not at the place where it makes sense to buy the house. Cuz don't forget, there are
other costs besides just the down payment. There are closing costs, and furnishing costs, and moving costs. If you don't have the cash available for those things, you might be putting yourself in a precarious situation.
I mean, look, we've always thought housing was a five to seven year right now you say, "I don't know if I can promise myself I'm going to be here for the next three years, five years." That's going to lend you to more towards
say, "Hey, now, this is where I'm going to raise my family. I'm going to be here for the next decade and beyond." Then long-term probably is going to move the needle closer to the buying. So, definitely pay attention to the time
>> And then the other thing is, what is the true monthly cost? Not not just, "Okay, I saw what the rent was on the brochure." Or, "Oh, I know what the principal and interest is going to be." Don't forget that there are other costs.
There are costs like property taxes, insurance, maintenance, HOA fees, utilities. You want to make sure you have a very realistic understanding, route or whether you're going to go the renting route, to what the actual
monthly burn is going to be for you. And you want to make sure that monthly burn metric for you. >> Yeah, and all this is kind of if you >> Yeah, and all this is kind of if you want to bring this to to to boil down to
a really good decision matrix, we have 3 5 25 rule. I I one of the things I'm most proud of we didn't have to amend our rules just because we've hit this crazy cost of living time is that we've been one of the people on the
mountaintop screaming, "Don't put down 20% on the first house." It's okay to get on the homeownership train if you get creative and put down three to five percent. That's what we did when we bought our first homes. This is only on
down 20% on all the next homes when you're upgrading, but that first home is okay to put down 3%. You've got to be in this house for at least 5 years. And then, I would love The ideal is if you can keep your
monthly cost below 25%. I know that's much, much harder, especially in light of all the data points that we shared, but it is something just in the long term, and that's why I'm hoping that as you grow in your income, that in the
long term you can hopefully keep housing at an affordable range, so you're not house rich and life poor. >> Now, if you calculate these parameters and you run through 3 5 25, and then you begin to look at the inventory of houses
available in your area, and nothing fits this, like you cannot get it to fit this, like you cannot get it to fit in or near 3 5 25, then you've got two options. Option number one is rent. And I think
we're laying out the case that that's okay. It could be an okay permanent solution. Could be an okay temporary solution. Or, option number two, you could look at moving. You could look at getting creative and moving to an area
where you can find something inside that 3 5 25 rule, but the rule is there for a reason to prevent you from making a financial decision that makes it otherwise. >> So, let's let's land the plane on this
is that it's ultimately the back to the question of is it better to buy or rent in 2026? And it's definitely personal, and it's going to vary from people, but I don't mind being bold in saying that for a lot of you out there, renting is
probably going to We're breaking the the tradition of saying that buying is the ideal, because I think that you have to, you know, pay attention. If you're paying a premium right now for something, that's going to work against
you in your long-term success. And I want to be bold enough to tell you, as a financial mutant, you might need to change your field of vision, so that you're actually looking for the best opportunity for your army of dollars.
And for some of you, it's going to be playing the arbitrage of renting while you save and build in the background, so you then choose your shot on when is the right time to buy. >> Okay, Brian, but but this whole thing,
We've We've We've left something out here, and I can already hear about building equity? I've always heard that if you look at it, homeowners are wealthier than
non-homeowners. People who buy a house, people who get on the ownership side, people who get on the ownership side, they end up in a better financial financial situation than people who don't. What do you guys say to that?
when we look at the Federal Reserve data on on typical Americans and their net worth, it is all home equity, cuz the typical American is absolutely horrible with saving and investing and living on less they make. So, they are forced to
they bought at affordable prices. But realize what we talked about earlier. Right now, you are paying a 20% premium to buy over rent. And I'm telling you as a financial mutant, use that arbitrage, use that delta to actually not only
rent, but you can then be a financial mutant and build up that 20% to work for you as your army of dollar bills, because remember, past performance is because remember, past performance is not necessarily indicative or guarantee
success. So, I would be misleading you if I didn't tell you, "Hey, we have a unique moment in time." As your educator, as your fellow financial mutant, if I don't tell you these are the things you need to be paying
attention to, I'm not doing my job to tell you you have to have the the think differently than the herd. If you think like the herd, you get just and think like a financial mutant. >> At the end of the day,
we love home ownership. We also love What we really care about is you as a financial mutant being able to optimize your dollars. We don't want you to assume that if I choose to rent, I'm
throwing money away or I'm giving up on the American dream, but rather if you determine discern that renting is what makes the most sense for you right now you forever, that's okay. That's the way that you as
that's okay. That's the way that you as a financial mutant are exercising and optimizing your dollars and making personal finance personal. Don't let someone else tell you that that's not okay cuz they are not you.
>> And realize law of accelerating returns. We're in a huge innovation period right now is that there's in addition to you investing, you're going to be able to get hopefully a lot of alpha, a lot of performance out of being an investor
with all this technology. And don't don't shortchange that innovation and technology is not only going to give you a great investment return. There's a potential through automation, through robotics, through AI and the things
additional breakthroughs in construction. It's not There's potential that we could disrupt the cost of construction by 15 to 30%. There's a chance that we could make building houses 50% faster than they've been in
the past. We don't know what's coming down the pipe in the next 5 to 10 years it's going to change this equation, but what we have to take thing is where are they right now and how do we live our best life? And that's why we try to give
you the tools. If you go to moneygod.com/resources, calculator. I want you to go through our home buying checklist. We have a whole hub so you can feel like you've measured twice, cut once on this very unique
thing so that can live your best life, come out the other side as a financial mutant and not only live in the community you're supposed to, but have an army of dollars so you own your time that much sooner. I'm your host Brian,
that much sooner. I'm your host Brian, joined by Mr. Bo. Money Guy team out.