Should I Keep Renting or Finally Buy a Starter Home?

Dear Maxine Goldstein,

I'm 28 and have saved $45,000. My friends tell me I'm throwing money away on rent and need to buy a condo. But I like my flexibility, and I've been investing $800 monthly in index funds for three years. My rent is $1,400 for a one-bedroom. Should I use my savings for a down payment, or am I right to keep renting and investing? — Stuck in Analysis

You need to run your own numbers, not your friends' opinions. I'm not a financial advisor, but I can show you what to calculate.

First, buying a home costs more than the mortgage payment. You pay property taxes, insurance, HOA fees, maintenance, and repairs. A common estimate puts these extras at 1% to 2% of the home's value each year. On a $300,000 condo, that means $3,000 to $6,000 annually beyond your mortgage. Your friends who say you're "throwing away" rent money forget that you throw away these costs too when you own.

Second, your down payment money stops growing in the market. That $45,000 could compound at roughly 10% annually in a diversified stock portfolio over decades. Put it into a down payment instead, and you trade that growth for home equity, which historically grows at 3% to 4% annually. Homes appreciate slower than stocks over long periods.

Third, count your actual monthly costs. With $45,000 down on a $300,000 home at today's 7% rates, you'll pay about $1,700 monthly for the mortgage alone. Add $400 for taxes, insurance, and fees. Your $1,400 rent becomes a $2,100 ownership cost. That $700 difference invested monthly at 10% returns grows to $147,000 in 15 years.

You should buy when homeownership fits your life, not because people shame you about rent. Do you plan to stay in your area for five years minimum? Can you handle a $10,000 emergency repair? Does ownership give you stability you value?

Your current strategy works. You invest consistently and keep housing costs manageable. Many people build serious wealth this way. Homeownership builds wealth too, but it locks up capital and reduces flexibility. Both paths work. Pick the one that matches where you want to live and how you want to spend the next decade.

Stop letting other people's anxiety drive your financial decisions. Run the numbers for your market, your income, and your goals.