Why You Shouldn’t Buy A House

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Many are told you need to buy a house to amount to anything, but it's not for everyone. Here are some reasons why owning a home might not be for you.

Buying a house is often considered part of the American Dream. Coupled with things like Mom, apple pie and baseball, owning your own house is thought of by many to be the thing we all should do. To say otherwise usually brings on controversy and thoughts that the person left the ranch a long time ago.

Well, get those cyber stones ready – I think there are many times where buying a house is one of the worst things you can do for your finances and personal/professional life. This isn’t to say that owning a home isn’t a good thing to do, because it very much can be, but as with many things related to money, it’s not something that should be accepted blindly.

We Live In A Changing Culture


It’s no surprise we live in a changing culture. From a cultural, political and professional aspect we’re experiencing a lot of change. Change can be a good thing but there can often be ramifications with that change.

Take the workplace for instance. We’re seeing a shift in more independent or contract workers. While some might argue that’s a bad thing, I have benefitted greatly from it, as we have been able to grow a solid business as a result. What that begets is fewer people spending their entire careers with one company. In fact, it’s now become a relatively good thing to move to a variety of different careers over the course of a professional life.

A change like this requires flexibility. It requires the ability to make a move when needed. That is flexibility that may not be available when you buy a house. In fact, it can be the opposite. Added to that, MarketWatch reports that younger generations are putting off homeownership for a variety of reasons – including growing student loan debt.

Does this necessarily mean those who are younger and not looking at homeownership are any less financially prudent if they’re still pursuing many other financially positive things? I don’t think so.

You Can Be Responsible and Not Own a House


This may be a shocker, but individuals can still be financially responsible and not own a house. I’d say there are certain instances where you could argue a person is better off financially because they don’t own a home. I know there is the “throwing money away on rent” argument, but does it really make sense to look at homeownership if you have little to nothing to put down as a down payment?

Personally speaking, buying our current house is one of the worst money mistakes we’ve made as a family. We were expecting our first child, we I had this preconceived notion that having a family meant we HAD to be in a house and off we went. That resulted in us getting in with no down payment and having to pay the ridiculous PMI and, I’m sure, a higher interest rate. If I could go back, I’d have waited a year or two to save up some sort of down payment then buy a house.

You can still be financially healthy and not be in a house. The goal with finance should be to improve your net worth and in some cases that very well may not include a house – and that’s ok.

There Is A Tradeoff With Everything


As with anything related to personal finance, buying a house should come down to your personal situation. There is a tradeoff when it comes to where you live and that needs to be looked at based on your personal situation and not what “should” be done. After all, what use is it if it’s not what you want or isn’t in your best interests?

That being said, there are some great things about owning a home, such as:

  • The ability to do whatever you want with your living quarters
  • More privacy
  • The potential to build equity
  • Potential tax benefits

Of course, this also means the following:

  • Everything is up to you
  • Less flexibility
  • The value of the house may not increase as you’d like

However, there are also some good things to look at in terms of renting, such as:

  • Greater flexibility
  • You generally don’t have to take care of maintenance
  • Can potentially be cheaper in the short-term based on what is covered

But, you must consider the following:

  • Lack of privacy
  • Your rent will go up
  • Not building equity

There are many things to consider when it comes to buying a house, very much including whether or not you should actually buy. Take it on with the seriousness it requires, but also realize there is nothing wrong at all with renting. If you’re doing it because it’s THE thing to do or because you’re told it’s what “adults” do then now very well may not be the right time for you to buy a house.


Additional resource: If you’re looking for a simple way to stay on top of all your finances so as to know whether or not you’re financially ready to buy a house, then check out my favorite tool – Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth grow plus many other tools. 

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When do you think it makes sense to rent rather than buy? What kind of value do you put on the flexibility of being able to move when you’d like? If you rent, how often are you told that you’re being foolish in doing so?


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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • Mark@BareBudgetGuy says:

    We’ve been in our first house for 2 years now, and while we love it, I often find myself questioning if renting would be better. There are just so many costs you never think about!

    • John Schmoll says:

      Completely agreed Mark. It’s amazing how the costs can add up.

    • Kalie @ Pretend to Be Poor says:

      I agree that the hidden costs of home ownership really add up and are hard to anticipate or budget for. Taxes, interest, insurance, repairs, maintenance, furnishings, etc. get expensive quickly. We are DIYing a major repair that is taking all summer but would’ve cost $8000 to pay professionals. Thank you, carpenter ants! So home ownership isn’t necessarily more money-savvy than renting.

      • John Schmoll says:

        Ouch, sorry to hear that Kalie. At least you’re hopefully saving some money by taking the DIY approach. 🙂

  • Jayson @ Monster Piggy Bank says:

    I am satisfied with my house. I haven’t paid attention to moving in a new house or renting because our house fits our needs. I think renting would just be another stress, which I don’t want to deal with.

  • Jon @ Money Smart Guides says:

    I was in the same boat as you John. I thought I had to have a house. I put down 10% but I bought at the market peak and even bought more of a house than I could afford. I paid for it dearly. Looking back, I learned a lot but could be so much further ahead of the game with my finances had I not made the mistake.

    • John Schmoll says:

      I’m with you there Jon. We learned a lot, though I’d rather have more equity in the house and have a few less lessons. 😉

  • Tara says:

    Buying makes sense when you live in an area where buying a home is cheap. I live outside Philadelphia, where you can buy a small twin-house (3 bedroom, 1,300 sq feet) in a decent neighborhood with reasonable property taxes for around $100k. 20% down is not difficult with that amount and property taxes, insurance, and mortgage come out to around $700-$800 a month. I’m currently paying $900 a month in rent for a smaller 2 bedroom apartment. Older house have on average a 1-3% annual maintenance cost but you’re also getting a larger place and building equity. It really depends on where you live. If you can’t own a cheap home with reasonable access to your job (and you don’t have money for a down payment), it definitely makes more sense to rent.

    • John Schmoll says:

      You bring up a good point Tara. If real estate is relatively cheap in your area then it could make sense to go that route. For us, housing prices are low enough so it’s not too bad though know that’s not the case for everyone.

  • Laurie @thefrugalftarmer says:

    I used to be a staunch advocate of home ownership all the way, but now I get that it doesn’t always make sense. Maintenance and repair expenses, along with taxes, can be ridiculous. Not to mention the time it takes to take care of a house.

    • John Schmoll says:

      Exactly Laurie! There is so much to deal with in owning a home that it just doesn’t make sense for everyone.

  • Luke Fitzgerald @ FinanciallyFitz says:

    You’re absolutely right – there are tradeoffs. There are so many factors that go into the decision, and I’ll think we will begin to see more long-term renting as things continue to evolve.

    IMO, you don’t think about buying a house until you’re debt free with a e-fund. And to add in another layer – be confident you’ll be staying for at least 5 years.

    • John Schmoll says:

      Great point on the EF Luke! We were there anyway, but our agent and lender basically told us we had to have it. We really didn’t need to use it right off the bat, but it helped us sleep better at night.

  • Stefanie @ The Broke and Beautiful Life says:

    I’m very much with you on the “don’t buy” bandwagon- at least at this point in my life. Both my boyfriend and I have careers that are always in flux, we never know where we’re going to be next and what we want is still very much evolving. We’re saving for the “someday” downpayment, but it’s definitely still a ways off.

    • John Schmoll says:

      That’s exactly what I’m talking about Stefanie – that’s the very reason why you shouldn’t be looking at buying right away.

  • Kristi says:

    We too, thought that buying a house was the next step and the right financial choice for our family. We have regretted buying more than we have enjoyed it. We are now renting out our house because we had to move for my husband’s job, and we are in a living in a rental property. I wish we knew then what we know now about how much money goes into home-ownership.

    • John Schmoll says:

      I feel the same way Kristi. While I like the privacy and ability to do what we want I wish we would’ve waited a year or two in order to build up a nice down payment.

  • Claudia @ Two Cup House says:

    This issue has been of debate in our house for a couple of years. We have listed our house and plan to move next month to a much smaller home we will own outright. Buying a big house was a mistake we will only make once, which I’m glad was in our 20s and not something we have to worry about doing again later in life!

    • John Schmoll says:

      Sounds like you used it as a good learning lesson Claudia! What’s even better is you’ll be owning outright. 🙂

  • Hannah says:

    We own our house outright, have a renter, and we’ll still spend $20K on our house this year. Granted, we’re fixing up a junker, so we’re hoping the costs go down after we’re done, but we never expect them to drop below $5-$6K per year.

    If we move somewhere where houses aren’t a dime a dozen, we’ll probably rent again.

    • John Schmoll says:

      That’s awesome you’re renting and own outright. We’ve actually started to think about the possibility of renting our current house once we move.

  • Shannon @ Financially Blonde says:

    I have actually frequently advised clients against buying a home and they are always shocked because the “old school” mentality is that everyone should be a homeowner, but like you point out, it doesn’t always make sense for everyone, and based on some of my client’s goals, homeownership is not a necessity and would only keep them from achieving other goals.

    • John Schmoll says:

      I know – that mentality is right in a lot of ways but it falls short on the home ownership in my opinion. Owning a home can be a great thing, but many other things come along with it.

  • Grayson says:

    Good one John! Like you, when I got out of college and was getting married, I thought the next step was a house. We bought at the market peak and didn’t put down any down payment.

    We are happy with our next house because we put down a down payment, got some land, and enjoy the area we live in.

    The main thing is I’m a huge DIY guy and love doing work around the house. I also want to earn some equity (have more than 20% already) and own the house outright someday. Renting rates are growing here, so we pay less than many renters in our area.

    • John Schmoll says:

      Yep, you definitely turned it into a lesson Grayson. We hope to be owning outright in the near future, once we move. Rates are growing in Omaha as well and we want to have more flexibility.

  • Shannon @ The Heavy Purse says:

    We are happy homeowners but I absolutely agree that home ownership is not for everyone. It does not always make sense financially, especially if you don’t think you’ll live very long in that home or area. Because so many people believe home ownership is a wise investment, they also don’t necessarily do their due diligence. It’s good debt (or so they say) so don’t really think whether it’s debt they want or can afford. I see lots of people who buy homes they really can’t afford and are miserable because now they nothing left after they pay mortgage and bills for the “fun” stuff.

    • John Schmoll says:

      That’s my exact thought Shannon. While we’re “ok” I’d be much happier having some decent equity in our house. It’s not a mistake we’re going to be making again.

  • Kim@Eyesonthedollar says:

    Houses are pretty cheap to buy where we live and we had no plans to move for years, so it made sense to build a house when we did. Real estate has always been pretty good to us because we’ve always paid under market value, even on our build.

    If I had it to do over, though, I would have built a much smaller house. I think a huge problem with buying or building is that you get caught up in the process and can buy more than you need. Even if you can afford the payment, it’s not always the best move.

    • John Schmoll says:

      That’d be my concern with building, and one we’re considering for our move next year – buying or building too big. You get extra space and it’s that much easier to fill it with stuff.

  • DC @ Young Adult Money says:

    This is a highly personal question and I think Americans – especially those who are in the middle class – are biased towards buying. In general I think buying is better because you can build equity, but like you said there are trade-offs with everything. My sister is a good example of someone who is not willing to make those trade-offs, or at least not yet. She likes renting because she doesn’t want to have to worry about home maintenance or upkeep. She’s also able to move and live in whatever neighborhood she wants because she isn’t tied down or committed to a purchased property.

    • John Schmoll says:

      Completely agreed DC, it is very much a personal question. I think you’re dead on with the bias argument in the middle class. I understand wanting to build equity, of course, but in some instances it’s just not the right move to make.

  • Jacob says:

    “preconceived notion that having a family meant we HAD to be in a house ”

    I fell into this same boat. We bought, then my wife got pregnant and the house payment was like 60% of our income!

    It did end up driving me toward entrepreneurship, but I would NOT recommend anyone follow the path we went. Renting can be a VERY wise move. It all comes down to whether you are willing to accept the trade offs, but it could save you serious headaches (and money!)

    • John Schmoll says:

      Hey Jacob!

      Well, my decision was after finding out my wife was pregnant – I guess funny things happen when that happens. 😉

      That being said, I wouldn’t recommend our path either. It requires serious thought to determine if those trade offs are right for you or not.

  • Abigail says:

    I think some people probably do end up better off renting. Prices in our area were so low (slowly rebounding) that our mortgage is cheaper than what we were paying for rent. But the house has required a lot of work, aka a ton of money over the past 5 years. Not to mention the cost of utilities in Phoenix.

    I’m still glad we did it because eventually we won’t have rent at all, other than nominal amounts for taxes/insurance. But it’s been harrowing at times, and there are days (usually when something breaks) that I miss being a renter.

    • John Schmoll says:

      The low price argument is a tough one to turn down, especially if you can make it work out in your best interests.

      Yep, it’s much more convenient/money saving to call a landlord and ask them to fix something than to pay for it out of pocket.

  • Cat says:

    Great post. I think it will be a very long time before we buy. Mostly I don’t need the headache of fixing things while my husband is in residency and also we don’t know where we’re going to live at all, like ever. I’m fine with renting and don’t feel like I’m throwing anything away. I have this secret wish to pay for like half a house or all of a house after all our student loans are paid off.

    • John Schmoll says:

      Thanks Cat. Completely understood, especially with the potential of maybe moving within the next few years it makes total sense why you’d stick to renting.

  • Brian@luke1428 says:

    If flexibility was important to me, I’d rent instead of own. I wouldn’t buy a house unless I thought I’d be staying for at least 7 years. There is too much risk to be stuck with the property when you decide to move.

    • John Schmoll says:

      I think that’s a good barometer to have Brian. If you have distinct potential to move within a few years then it very well might be in your best interest to rent.

    • Peter says:

      The buying and selling fees alone would be enough of a cold shower to persuade me not to buy without a real long-term plan.

  • Peter says:

    “Not building equity” – Not building *home* equity. Important distinction.

    If you rent, you can free up money that would normally go toward home ownership and put it towards a balanced, diversified portfolio comprised of cheap index funds/ETFs that *will* build equity over time.

  • FunkedUP says:

    perhaps you should change the title to “why you shouldn’t buy a house without an adequate down payment’, very mis-leading the way it is

    • John Schmoll says:

      Thanks for sharing your thoughts, though I think you didn’t read the entire article. Down payment, or lack thereof, is only one part of the issue. Flexibility and the changing culture are other major ones as well.

  • SavvyFinancialLatina says:

    There are way more costs to owning a home than you think at the beginning. Especially if you bought a fixer upper like us. Projects left and right. Some things are cool to work on. Others I would prefer to skip, like when things that were fine break….

    • John Schmoll says:

      I know, right? I remember back to when our agent told us to expect things to happen and I didn’t believe her – boy I was wrong.

  • Derek - Tools 4 Retirement says:

    Great post. For those of us where our workplace is located in the heart of an expensive city (Los Angeles for us), the quality of life that comes from renting near work is huge. We love our walkable community with parks and great public transit options. Also, we’re in a rent control zone. I highly recommend renters to seek out a rent control situation, as it really pays off over time. We’ve been in our apartment for 7 years and our rent is now 50% below the going rate for comparable units in our neighborhood.

    • Derek - Tools 4 Retirement says:

      Correction on the rent control figures… I meant to say the going rate is now 150% of our current rent which equates to our rent being about 35% below market.

    • John Schmoll says:

      Thanks Derek! That’s an excellent point. My wife is from San Diego originally and lived in LA for some time and she has said the same thing. It just goes to show you that something like real estate is highly relative, as we know already, and in certain instances just doesn’t make sense to buy. If I were getting rent below the market like that and could get to work without having to drive I’d be hard pressed to want to buy.

  • Jaymee says:

    Reading this, I remember when I used to think that owning a home meant you’re a successful person and I REFUSED to even entertain the idea of renting because I was told it was a waste of money.

    Now, I see things differently. Like for some of my friends, I can see why renting works for them. For me, I would still like to own my home but I’ve come to that conclusion on my own instead of what others tell me. One of the reasons is that my parents allow me to live with them rent free so I have an opportunity to save up a down payment instead of renting. I’m glad I opened my eyes though 🙂 otherwise I might have tried to buy whatever condo fits my small budget just to say I own something (not really though).

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