Renting For Life: The Shocking Truth About Homeownership in America

A lot of people who have been priced out of the housing market, particularly younger people, are worried that they're never going to be able to buy a home and that they're just going to be renting forever. But the real concern isn't actually renting forever and not becoming a homeowner. It's actually just how much housing as a percentage of people's income in general has been going up over the past couple of decades. And it's actually on an unsustainable path. If things keep going in this direction, eventually only the rich will be able to afford a place to live, guys. And that is not an America that I ever want to see or live in. I'm going to share with you guys some real life stories and accounts of all of this and how this is affecting everyday people. Here's a story about a woman who in her 20s, after she graduated from college, she was renting and she assumed it would just be temporary until she eventually bought a house. But that was about 10 years ago. And instead, what happened is she ended up moving from one rental to another, to eventually moving back in with her parents, now in her 30s. And she graduated from college in 2016 and moved to Sacramento, California. And back then, Sacramento was a pretty cheap place to live. You could afford a house on an average salary there, guys, no problem. But what ended up happening is after paying rent, it was a challenge for her to save any extra money on her modest salary because she was working for a nonprofit. Each paycheck, she said, at least half of it went to rent. And we're talking 10 years ago, not even now with how bad things are. She said at the end of it, you're only left with a couple of hundred dollars left. And sometimes that would cause her to overdraw her checking account if she was hit with any sort of unexpected bill. This was 10 years ago, guys. What have I been telling people now? Get out of debt. Don't live beyond your means. Have extra money, an emergency fund saved up for things exactly like this. That advice is tried and true and has applied since the dawn of finances. But the problem is that nowadays, everything has been amplified. It is now to the point where people need to actually have far more of an emergency fund or safety net than they ever needed in the past because of how high the cost of living has gone up. So after 10 years of moving around and not being able to save enough money, she decided to live back with her parents once again. She's now 32 years old, and she's hoping she can catch up on bills and finally save for a home. But with where home prices are these days, she's just kind of giving up on that and shifting her financial goals to just skipping the whole home ownership thing and just saving for retirement. And I think this is a very interesting dynamic, guys, and something everybody should pay attention to if you're younger right now and are frustrated with the housing market. I think you should do the same thing because it's going to provide a couple of very interesting things to happen. First of all, if you switch to saving for retirement instead of saving for a down payment on a house, you're going to be saving for your future. That money is going to compound as you continue to save it, and it will build up towards your retirement. And what's going to happen is you are going to gain extra wealth this way. You will build a good financial habit. And it could even come to the point where you might not even want to buy a house anymore because now you're seeing your retirement accounts grow so much, and it gives you so much extra motivation to go out there and put more in and potentially be able to retire even a few years early that you might just give up on the idea of home ownership altogether. It might just not be worth it anymore. You're going to be sitting there weighing your options like, do I want to be a broke homeowner or do I want to be a wealthy renter? Because that's kind of the decision a lot of people have to make nowadays. This woman says, home ownership doesn't feel like an achievable goal at this point in my life, and it might never be achievable. And obviously, guys, the main obstacle to owning a home for anybody these days is the cost. The media and all these real estate people constantly focus on interest rates, which we'll talk briefly about at the end of this video, which is clearly not the issue, but that seems to be the only thing they can mutter out of their mouths is interest rates, interest rates. And that's the whole reason the housing market's broken, which is just the biggest lie ever. Because the reality is right now in America, the median price home is about five times the median household income, which means if you were able to save your income for five years straight, every penny of it, no taxes, whatever, then theoretically you could buy a home for cash. But back in the 1990s, it was only three times your household income. So housing relative to incomes were much more affordable in the past than they are today. And what's happening is this is causing a big demographic shift in who owns houses. If you take a look at this chart here, you can see that every generation going back to the silent generation all the way through millennials, Gen Z or Gen Alpha is not on this chart yet. But what you can notice is clearly the homeownership by the age 30 has been continuing to decline by each generation, guys. It is already at almost half for the millennials now, where it was for the baby boomers just a few decades ago. And I would imagine things are going to keep moving in this same direction for Gen Z and Gen Alpha once they end up on this list. Although by the time Gen Alpha reaches actual home buying age, maybe in their mid 30s or so, there's a good chance that they could be taking major advantage of the silver tsunami at that point. And homeownership rates by the age 30 could actually skyrocket for that generation and maybe the next one after. But here's another real life account. Here is a woman who wants to stop spending money on rent and own a house instead, because after all, people are told that renting is a waste of money. You're not building any equity. You're paying off the landlord's mortgage and making them rich and making yourself poor, which has some truth to it, but also not, especially if you divert the money you're saving in rent towards saving for your retirement and your future like we talked about earlier. But anyways, she lives in Alamos, New Mexico, where the median home price is $550,000. So pretty expensive area of the country. And she says buying a house just is not within reach. And she grew up in this town and she wants to stay there. And she has a master's degree, but she cannot afford to buy a house there. She's 37 years old and her $1,900 a month rent takes up about one third of her $71,000 in gross income. And it's been difficult to save for a down payment or anything else between rent, utilities, car payments, and other bills. She says the money comes in and goes out type of a situation. This is the situation most people in America are in today. Almost all of the money that comes in goes out. And in some people's cases, we're living paycheck to paycheck or living beyond their means. More money goes out than even comes in if you're living off of debt. Now there's a possibility she might get a promotion and make an extra $10,000 a year, which might give her the opportunity to save a little more money. But in order to get that raise, she needs to take four master's level classes in addition to her master's degree in special education that she already holds. And $10,000 is a decent raise, but I don't think it's life-changing money, guys. It's going to help save a little bit extra each month for your down payment and help you qualify a little bit easier. But at the end of the day, home prices are so high, it's barely moving the needle, let's be honest. And let me tell you, she's already 37 years old. So the possibility of this woman potentially having a family and children and things like that, her window is closing. She's running out of time, essentially, to make something like that a reality if it's something that she wants to do. So people are saying, oh, why isn't anybody having kids? And why is no one starting families and this and that nowadays? A lot of it just comes down to pure economics, guys. People cannot start a family if you can't even afford a place to live, a house to raise a family in. And then by the time you can afford it, you're too old to have children. Or maybe you don't want to devote even more of your finances to that by that point in your life, even if you are still able to do it. Let's flip the script a little bit. Here's the story about a 34-year-old woman who actually did buy a house, but owning that home ended up being far more trouble than she was hoping it would be. Her cousins are realtor and helped her buy a home for $320,000 in Tacoma, Washington. And she felt like it was a huge milestone for herself and she was really looking forward to being a homeowner. But her monthly mortgage payment was about $2,500 a month. And previously, she was only paying $1,900 a month in rent. And she was a classic example of what you would call house poor. She got into the house, but literally had no money left over, not even enough to buy furniture. And she only had a tiny two-seater kitchen table in this entire house. This is the last situation you want to end up in if you want to be a homeowner, guys, let me tell you. And today I'm walking down Meadow Drive here in Mill Valley, California. So she ended up living in this house for three years. She accumulated $50,000 in credit card debt. And she ended up feeling like instead of living the American dream, all of a sudden she's living the American nightmare because after all, being a homeowner is supposed to give you stability, right? Oh, your payment never goes up. Being a renter is for losers. Well, it turns out that's not the case, guys, because if you're paying an extra $600 a month to own a house and you can't even afford to fill it up with items or furniture, and a big expense comes along like a roof repair, an HVAC needing to be replaced, that's just to name a few. Well, now all of a sudden you're facing an extra 10, 15, $20,000 that you certainly don't have. And that's how you end up accumulating 50 grand in credit card bills in just three years. Luckily for her, at least she sold the house in 2022. So that was like a great time for her to sell at the top of the market. And she was able to pay off her debt and she ended up moving in with her family into a three bedroom rental in an area that she loves. But even now as a renter, because of how much rents have gone up since 2022 as well, rent now consumes 40% of her $83,000 gross income, which is roughly the median household income in the US. And this is the larger problem that I've been saying, guys. Home prices exceeding five times people's annual income. Rent prices exceeding 40% of people's gross pay, which means probably more like 50 to 60% of their net take-home pay because gross is before taxes. One in four renters now is spending more than half of their gross income on housing as of 2024. That number's probably a lot higher now. And so when the rent goes up, that takes a bite out of everything else. Your potential to save for the future, your potential to pay other bills, your potential to ever become a homeowner is just completely erased by those rent increases. That's why you're seeing record amounts of credit card debt right now. That's why you're seeing auto loan delinquencies at crisis levels. And people also have to cut back on food, cut back on savings, move further away from their job in order to make the numbers work, have longer commutes. But even though the rent is going up and is higher than ever, so is buying a house, guys. It still costs less than buying a house. That's something else everybody needs to acknowledge. Even higher income households right now, who in previous generations were easily able to buy a home, are choosing to rent today. Because right now, renter households with incomes over $100,000 have been the fastest growing segment of renters over the past decade. Even a growing class of millionaire renters. Why? Because it's the smart financial decision right now. If you are saving $600, $1,000, $1,500 a month by renting instead of owning, that is a massive amount of money you can put into investing for your future. And it will pay off. Because if you take a look at this chart here, renting is getting more expensive across different income levels. Even on the high end, even if you earn over $75,000 or higher, the percentage of your income that's being eaten up by rent continues to climb, guys. And on the bottom end, I don't even know how people are surviving. It really has to be like five, six adults in one household. When you're under $30,000 a year, it's taking up 80% of your income. That's completely impossible. So you need to have multiple of those poverty level wages coming in, in order to survive. And then a lot of people over the years have just said, well, we just need smaller houses. Because in the early 2000s, there was a major construction boom of all the McMansions, these 3,000 plus square foot homes that a lot of younger buyers don't want because they cost too much. They're saying, give us those homes that are under 2,000 square feet again, a nice starter home that we can actually afford. Right now, the average size of a new single family home nationwide actually declined 11.6% over the past decade. Used to be 2,724 square feet in 2015. And as of 2025, it went down to 2,400 square feet. So still bigger than most people are looking for, but it is a decline and builders are sort of listening to their clientele and the demand of the market of where it's at. But also buyers are paying more for less because during that same timeframe, the average price per square foot went up almost 72%. But a lot that has to do with inflation. The cost of building homes has absolutely skyrocketed with the higher material costs, the higher labor costs and all the tariffs certainly haven't been helping that situation either. But in this case, people are putting their money where their mouth is. People want small starter homes and that's exactly what people are buying, guys. In 2025, about 25% of brand new single family homes sold measured less than 1,800 square feet. So this is the type of starter home that young buyers want today and can actually afford. Obviously, the budget is the top motivator for buying a smaller home, but also owning a larger home is more work to maintain and you might not need it, especially if you don't have a family yet. But don't let this scare you because the truth is everybody's paying more per square foot for less house today than ever before, guys. Not just people who are buying these small brand new starter homes, everybody who's buying a house today is in the same boat because of how much home prices have gone up over the past several years. And like I said, even though you're paying more per square foot, the maintenance costs are a lot smaller than on a larger home and smaller homes also cost less to heat and cool and furnish and maintain and repair. Just ask the woman in Tacoma how that worked out. She didn't say the size of the house that she bought, but she ended up in massive debt owning that house for just three years. Luckily, she sold at the top of the market and she was able to pay that debt off, but now she's getting squeezed by the rent. A couple of weeks ago, I also did a video about why everyone's moving back to the Midwest and turns out the Midwest is the most popular place in America where these new homes are selling for under 1,800 square feet. 31% of the new homes sold there last year were less than 1,800 square feet. So yet another reason why so many people are probably moving to the Midwest because not only is housing most affordable there compared to any other region of the country, but also that's where you can get the starter home that fits your needs and budget. And here's one last thing I want everybody to know, guys. I constantly see these stories here and there about why you should not wait to buy a home in this environment. I saw this headline today that says, waiting for home buying to get more affordable, don't hold your breath. That was the headline of the news story. Well, first of all, it is getting more affordable. Contrary to everything we just talked about, it is getting more affordable because home prices have been coming down in the vast majority of America. Right now, 80% of markets across the country are buyer's markets, guys. That means the ball is in your court as the home buyer. You have more choices than there is demand. That puts pressure on prices to come down. But the reason that they put out these stories is because they constantly tell people the same thing. Oh, don't sit around and wait to buy a house because it's going to get more expensive because mortgage rates are going to be going up, which they are. I have predicted this since the treasury yields have been going up and a lot of other economists and people in the know are saying the same thing, that mortgage rates are going to be going up. They are going up right now. I think we're going to see mortgage rates above 7% by the time the year is through. It's already at 6.81%. We just saw a huge bump in the 10-year treasury this week. It's probably going to go up even higher by the end of this week. But they constantly center the affordability argument around mortgage rates as if that's the only thing that matters. And mortgage rates going up is a guarantee that you won't be able to afford a house in the future. Newsflash, that's not how money works, guys. As mortgage rates continue to go up and people already can't afford to buy these houses now, clearly, by everything we just talked about, what does that do to the seller who wants to sell? It puts them in a pretty bad spot. They already can't sell the house for the price they have it listed at now. Then mortgage rates go up, which increases the payment for any potential buyer, which lowers affordability. So if a seller truly does want or need to sell, well, what are they going to have to do in order to get someone to buy since they have no control over mortgage rates? What do they have control over? They have control over their asking price. So that's the other side of the coin that you will never hear from the media. They never ever talk about this. According to senior economists over at Realtor.com, he says that most of the recent affordability challenges have come from increased mortgage rates and home prices have actually been falling on a year-over-year basis throughout 2026 at the national level. That's coming directly from the senior economists at Realtor.com. That is proof that what I'm telling you right now is how the housing market and money works. When interest rates go up and prices are already at unaffordable levels, it puts a tremendous amount of pressure for sellers to bring prices down if they want to get their home sold. Sure, you can keep your head in the clouds and keep it listed higher for as long as you like, and the house is just going to sit there on the market. I see examples of this every day. So these higher interest rates, contrary to what the media will tell you, actually helps affordability, guys, because demand is not going to come roaring back anytime soon unless incomes make a massive leap forward. And as long as that demand is suppressed, as interest rates continue to go up, it is putting the pressure on sellers, not buyers, because the sellers are the ones who need to sell. The buyers don't need to buy. The buyers need a place to live. They don't need to be buyers. So just know that the next time you see a story that puts pressure on you as somebody who's maybe considering, should I keep renting or maybe I should buy because of the state of the economy or where prices are going or whatever, maybe you actually can hold your breath. Because if what we've seen happen over the past couple of years in terms of prices coming down, even senior economists over at realtor.com finally admitting this and admitting that these higher mortgage rates are causing prices to come down, well, I think that gives us a pretty good shot at prices continuing to come down in the near future as mortgage rates go higher and as the demand to buy homes just completely evaporates, guys. The ball is in your court as a buyer now more than it has been in years. And I just consider this very good news and you should too. It doesn't mean that everywhere is going to get more affordable because there are places that are still getting more expensive. But even those areas are starting to see massive declines in how fast prices are increasing. So affordability is improving month after month right now and I expect it to continue to improve for the foreseeable future. So do not feel the FOMO, do not feel the pressure that you need to buy right now because if you're not in the position to do it, you're going to end up like these other people or worse and have massive bills and debt if you can't truly afford to buy the house. But if you can't afford it and you find a deal, go for it, guys. Don't forget to use my link down in the description below if you need a real estate agent, whether you're a buyer or a seller, it's 100% free for you to use. And if you do use it, not only does it help the channel, it helps you and I appreciate it. So if you enjoyed this video, make sure you subscribe to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here and I'll see you in the next one.