We’ve seen a lot of news recently about the housing market in Texas and throughout the country. Low interest rates, inflation, and a surge in telecommuting have fueled a buying frenzy and driven housing costs sky-high. It’s a great time to be a seller, but many buyers are finding themselves priced out of the market or unable to compete with investors or corporations that can bring all-cash offers to the table.

In the midst of this inflated housing market, many of our clients are asking whether they should rent or buy a home, especially if they’re nearing retirement. It’s a tough question, and the answer depends on a lot of different factors. 

For example, buying a home could be a good investment if prices continue to rise (as it appears they will for the time being). However, some experts indicate that the housing market has to crash at some point, which could lead to a repeat of the 2008 recession characterized by countless underwater mortgages and foreclosures.

The truth is that there isn’t one single answer that’s right for everyone. Renting is best for some people, and buying is right for others. The key is to look at the market and at your unique situation to decide which is the best choice for your family.


What Are the Available Housing Options?

Depending on your exact situation, there are several actions you can consider taking in this housing market: 


  • Selling your home and buying another property
  • Selling your home and investing the profits
  • Choosing to rent until the market settles down
  • Moving to another state with lower property values

The challenge with each of these options is that they aren’t purely financial questions. Yes, each decision could have a significant impact on your net worth, but there are other factors to consider, like what your family needs and how your housing costs can affect your retirement savings. There are financial upsides and downsides to each option, so it’s essential to figure out which one offers the most benefits for you.

What If You Already Own Your Home?

If you already have a home, you’re very fortunate; you don’t necessarily have to interact with the housing market at all. However, there are some key things you need to consider. 

What do your monthly expenses look like, especially compared to your income? Are your mortgage payments sustainable? What about retirement planning? Are you able to contribute enough to your retirement fund? 

If you maintain your current expenses (like your mortgage payments) into retirement, will you have enough income from your retirement account to cover those costs? Or will you need to make some changes to your lifestyle so those retirement distributions go further?

These are essential questions to ask yourself. It can be hard to figure out the answers, especially if your financial plans include supporting your parents, children, or grandchildren. An experienced financial advisor can help you work through the numbers to figure out what your retirement needs will look like.

How Do You Decide Between Renting and Buying?

If you don’t currently own a home and are looking to move, which is the smarter financial choice? Of course, one of the main factors to consider is the monthly cost. 

Traditional financial advice from previous decades often recommended owning over renting under the assumption that monthly mortgage payments built equity (and therefore, wealth) whereas rent payments did not. However, that advice isn’t necessarily accurate today. In fact, a recent Axios report shows that in many places in the country, renting is cheaper than owning.

There are other financial considerations beyond the cost of monthly rent or mortgage payments. For example, those monthly costs could change significantly if your landlord decides to raise the rent. But homeowners aren’t immune to rising monthly payments; increases in home values lead to higher property taxes. 

How Do You Want to Live?

While the financial considerations of owning versus renting are essential to think about, there are other factors as well:

  • Do you want to leave a home to your children?
  • Do you want to downsize to a low-maintenance apartment or patio home?
  • Do you enjoy having the chance to remodel or expand your home?
  • Would you prefer having the freedom to move to a new area easily?

All of these considerations essentially boil down to one basic question: How do you want to live your life? The answer is based on your personality (and possibly your spouse’s). Your family situation may also factor into the decision, but at the end of the day, you need to figure out what your ideal lifestyle looks like.

Make Your Decision Based on the Big Picture

Figuring out whether to rent or buy a home is complicated. There are advantages and disadvantages to each one. Along with the financial factors, you also need to think about how you want to live your life. 

Remember that no matter which option you choose, it’s vital to make sure you can still fund your retirement adequately to meet your goals. If you’re not sure whether your retirement planning is on track, we can help.

With Guiding Wealth, you can work directly with a Certified Financial Planner™ to make a customized plan for your finances. We’ll help you understand how to balance your spending and investments with your retirement savings. Schedule a consultation online or call us at 214-810-3835 to get started.