Is owning a home still part of the ‘American Dream?’ What to consider before deciding to rent or buy

In Houston, Texas, homeownership has long been synonymous with the “American Dream,” but with soaring home prices and interest rates, many prospective buyers are grappling with the idea of achieving this dream.

Chantel McKinney, a hopeful homeowner, often browses real estate websites like Zillow, contemplating what she can afford in the current market where the average home price sits at $391,080, as reported by HAR in February 2024. However, with approximately 60% of Houstonians renting, the question arises: should homeownership still be a primary goal?

For McKinney and many millennials, the traditional notion of owning a home seems daunting, given the financial constraints. Nevertheless, McKinney is diligently saving in the hopes of realizing her homeownership aspirations, a strategy echoed by Sarah Mizell, a financial advisor at Cove Wealth Management.

Mizell points out the advantages of renting, such as flexibility and reduced responsibility for repairs, highlighting that rushing into homeownership doesn’t necessarily alleviate feelings of being stuck. She advises potential buyers to evaluate their financial readiness by considering factors like savings, expected duration of residence, and housing costs.

The rule of thumb is to allocate around 25% of one’s income to housing expenses, encompassing mortgage, taxes, insurance, HOA fees, and maintenance costs. For an average Houston home priced at nearly $400,000, annual expenses could amount to approximately $46,000, requiring a household income of about $183,000 to afford comfortably.

Understanding the significance of long-term commitment, Mizell cautions against buying if relocation is anticipated within three to five years. For those still aspiring to own a home, Mizell advocates incremental financial adjustments and disciplined budgeting to inch closer to their goal over time.

Ultimately, Mizell emphasizes the importance of aligning financial decisions with personal circumstances, regardless of societal pressures, underscoring the value of prudent financial planning and patience in achieving homeownership aspirations.