Is It Cheaper to Rent or Buy in 2025?
Is it cheaper to rent or buy a home in 2025?
The short answer: renting may seem less expensive upfront, but buying often wins over time thanks to equity growth, stable payments, and long-term wealth building.
Why This Question Matters More Than Ever
The rent vs. buy debate is one of the most common—and most misunderstood—questions in real estate. With rents hitting record highs in many markets and mortgage rates fluctuating, buyers are left wondering whether they should keep renting or take the plunge into homeownership.
According to the National Association of Realtors (NAR), first-time buyers made up about 24% of all purchases in 2025, the lowest share since 1981. That means millions of renters are sitting on the sidelines, convinced it’s “cheaper to rent.” Helping them see the whole picture can change lives—and unlock homeownership opportunities that many didn’t realize were possible.
When Renting Makes Sense
Buying isn’t right for everyone. If you don’t plan to stay in one location for at least three years, prefer not to handle maintenance costs, or live in a rent-controlled unit, renting might be the better choice. But for most people who want stability, financial growth, and control over where they live, buying is worth serious consideration.
The Down Payment Myth
A major barrier for renters is the belief that they need 20% down to buy a home. According to NerdWallet’s 2025 Home Buyer Report, 62% of Americans still believe this outdated myth. The reality? Many loan programs allow for as little as 1–3% down, and down payment assistance (DPA) programs averaged $18,000 in 2024, according to DownPaymentResource.com.
These programs can make the difference between continuing to rent and stepping into homeownership. Sites like Realtor.com and Zillow now even list available DPA programs alongside property listings, making it easier than ever to see what you qualify for.
Credit Concerns Can Be Fixed
Some renters hesitate because of credit challenges. But credit repair is more accessible than ever, with reputable resources available to guide buyers in boosting scores and qualifying for better loan terms. Even minor improvements in credit can significantly reduce monthly mortgage payments.
New Homes May Offer Better Deals
Surprisingly, in 2025, new construction is often more affordable than existing homes. Data from the U.S. Census Bureau and NAR showed that in Q2 of 2025, the median price of a new single-family home was $410,800, while existing homes averaged $429,400. That $18,600 gap is the largest on record. On top of that, builders frequently offer incentives—such as mortgage rate buy-downs or upgraded finishes—that make new homes even more attractive.
Running the Numbers: Rent vs. Buy in Los Angeles
The best way to compare renting vs. buying is to run the numbers. Tools like NerdWallet’s Rent vs. Buy Calculator allow you to plug in your market’s rents, home prices, and mortgage rates to see the break-even point.
For example, in Los Angeles:
Renting a 2-bedroom apartment costs about $3,000/month.
Buying a $750,000 home with 20% down at a 6% interest rate results in a monthly mortgage of about $3,600 (excluding taxes and insurance).
At first glance, renting seems cheaper. But by year three, the homeowner begins to come out ahead, especially as rents rise and mortgage payments remain stable. Over a decade, the savings and equity gained from owning far outweigh the extra upfront cost of buying.
Wealth Building: The Most Compelling Case
The biggest argument for buying instead of renting is long-term wealth. According to Federal Reserve data, the median net worth of homeowners is over 40 times higher than that of renters. Homeownership allows you to build equity, benefit from appreciation, and lock in predictable housing costs—something renting can never offer.
Why Now Could Be the Right Time
Despite headlines about affordability challenges, many markets—including Los Angeles—are shifting toward a buyer’s market. This gives first-time buyers more negotiating power, potential seller concessions, and better opportunities to secure homes with favorable terms.
If you’re debating whether to rent or buy, ask yourself:
Do you plan to stay in the area for at least 3 years?
Have you explored down payment assistance options?
Do you want to lock in stable housing costs instead of facing rent hikes?
Are you ready to start building equity instead of paying someone else’s mortgage?
If you answered “yes” to most of these, buying could be the more brilliant move.
Final Takeaway
In 2025, renting may look cheaper in the short term, but buying often comes out ahead when you factor in stability, equity, and long-term financial security. The key is to bust the myths—like the 20% down payment requirement—and use today’s tools and incentives to make homeownership more accessible than ever.
Ready to explore whether buying is right for you? Call Emily Lin today at 310-751-4137 to learn about your options and take the first step toward owning a home.
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