Is it better to rent or buy a home? The answer isn't always straightforward, as both options come with benefits, risks, and trade-offs. The key is looking closely at the pros and cons of renting vs. buying in today's market, especially in high-cost cities like New York.
In this guide, we're breaking down the real numbers, hidden benefits, and current market decisions so you can decide what makes sense for you in this buying vs. renting decision.
What You'll Learn About Buying Vs. Renting a Home
- Which option costs less right now: renting vs. buying a house with a real-world example
- The other benefits of owning versus renting, beyond just the monthly cost
- How to think about today's market and what's coming next to help you make the smartest move for your lifestyle and long-term wealth
Benefits of Buying a House vs. Renting: A First-Hand Perspective
According to Mukul Lalchandani, founder of Undivided, "I've lived in both scenarios. For 15 years, I rented in NYC, paying roughly $3,000 per month or about $540,000 in that time.
Then I switched to owning my primary residence, and my monthly payments were about the same. The experience of each has been very different, and that's what we're going to unpack today.
Renting in a high-cost city can feel like pouring water into a container that secretly has a hole in it. Every month, you pour water in, and it slowly leaks out. That's your rent.
Now, picture another bucket with no holes. Every time you pour water in, it stays. Over time, it fills up. That's the difference between renting and purchasing a home.”
Renting vs. Buying: Which Costs Less Right Now?
Let's start by answering the question everyone has first: Is it cheaper to buy or rent a home right now?
- In Manhattan, the average monthly rent for a luxury one-bedroom apartment is $5,909.
- Buying a similar property with 20% down and a 6.6% mortgage rate could result in monthly payments surprisingly close to the rent amount.
But here’s the catch:
- Rent often goes up, sometimes dramatically.
- Example: A one-bedroom at 50 West rented for $7,000/month in 2023. In 2025, it’s $9,000. That’s a 28% rent increase for the same exact apartment.
Key takeaway: While buying has higher upfront costs, monthly expenses can be comparable (and more stable) than renting.
But cost is only part of the equation. To truly compare the benefits of owning a home versus renting a home, we need to examine what each offers beyond just monthly mortgage payments.
Pros and Cons of Renting vs. Buying
Beyond the monthly bill, there are bigger lifestyle and financial factors to consider when making the decision. Here are some of the major advantages and disadvantages of buying versus renting.
Benefits of Buying a Home
- Home Equity & Appreciation: When you buy, you can build equity, and your property may appreciate over time.
- Tax Deductions: Homeownership offers several tax benefits, including:
- Mortgage interest deduction: You can deduct the interest portion of your mortgage payments, which in the early years is often the majority of your payment.
- SALT deduction: You can deduct up to ten thousand dollars of state and local taxes, including property taxes.
- Freedom to Customize: You have the freedom to customize your home as you see fit.
Benefits of Renting a Home
- Greater Flexibility: Your flexibility is higher, and you can pick up and move quickly if it suits you.
- No Maintenance Headaches: You don't have to worry about maintenance and repairs (that's your landlord’s responsibility)
Lower Upfront Costs: In NYC, the cost of renting is usually only 1 month's rent + 1 month security deposit vs. 10- 20% down + 3-4% in closing costs to buy a home.
Market Outlook: Renting vs. Buying Homes in 2025
Now, all of the renting vs. buying pros and cons can look very different depending on what the housing market is doing, and 2025 has its own unique set of conditions.
Factors to consider when thinking about buying:
- Mortgage rates: Higher than a few years ago, hovering around 6.5–7%.
- Inventory: More available homes, fewer bidding wars.
- Seller concessions: Closing cost credits, covering carrying costs for 1–2 years.
Things to consider on the rental side:
- Rent prices: Rents remain historically high.
- FARE ACT: Since the FARE Act went into effect, NYC rents jumped another 12% in just a few months.
- Example: A two-bedroom went from $9,000 to $13,000 in under six months, which is a $48,000 annual increase.
Long-Term Wealth: Advantages of Buying a House vs. Renting
While short-term numbers are important, the long term is where the decision really plays out. Over time, ownership has the potential to do more than just cover housing costs; it can be a valuable asset.
Benefits of buying a house vs. renting:
- Hedge against inflation.
- Build a transferable asset.
- Leverage home equity for loans or investments.
According to Mukul, " One of my clients in South Williamsburg bought in 2013 for $1.5 million.
Ten years later, they sold for $2.8 million. That’s a $1.3 million gain for the client, all while living in and enjoying their home."
The Risks of Renting vs. Buying a House
Of course, no decision is without its risks, which is why it's essential to consider the trade-offs. Let’s look at the pros and cons of buying vs. renting from the risk perspective.
Risks of buying:
- Potential market downturns.
- High monthly carrying costs.
- Real estate isn't liquid, and selling takes time and money.
Risks of renting:
- Rent hikes can be unpredictable.
- No equity growth.
- You're entirely dependent on the decisions of your landlord.
So make sure to carefully weigh all the pros and cons of buying vs. renting before you make your decision.
Should I Rent or Buy a House? Final Thoughts
So, is it better to rent or own a home? Neither choice is automatically better. The right decision depends on your financial situation, lifestyle, and the current market conditions.
But if you're leaning toward buying a home, especially in NYC, there's one more important thing to understand: exactly how condos work.
Most luxury buyers choose condos over co-ops. But be aware that condos come with specific ownership rules and processes that can impact your decision.
Be sure to check out our video, which breaks down exactly how condos work in NYC, from ownership to fees and the rules you need to know before you buy.
Although understanding the benefits of homeownership is one thing. Finding your dream home in a complex market like New York City is another thing entirely. Luckily, Undivided can help.
