If you want to be financially independent at a young age, don’t buy a house, serial investor says. Home ownership is just an ‘expensive indulgence’

Considering home prices are 50% higher than before the pandemic, mortgage rates remain stubbornly high in the 6% range, and everything feels more expensive thanks to inflation and tariffs, home ownership feels largely out of reach for many younger Americans. 

But one serial investor says that opting for renting instead of home ownership may not be as bad of an idea as some people think, despite it being the quintessential American Dream.

“If your goal is to become financially independent at a young age, you probably don’t want to go buy a house—but it’s a very controversial thing to say,” JL Collins told The Diary of a CEO podcast in an episode published Jan. 12. 

Collins, the best-selling author of Pathfinders and The Simple Path to Wealth, said the reasoning is simple: Buying a home “dramtically inflate[s]” your cost of living. While your mortgage payment and rent payment may be similar on paper, owning a home ends up costing more in the long run and comes with unexpected expenses—often referred to as the “hidden costs” of homeownership, like insurance, repairs, and updates. 

“You have the expenses of maintaining it, paying the taxes on it, blah, blah, blah,” he said. “If you stay in an apartment that is just enough to meet your needs—which, by the way, is what my daughter has done and continues to do—your costs will be lower.”

In fact, a LendingTree study also published this week shows renting is cheaper than owning in every large U.S. metro, with U.S. homeowners paying 36.9% more a month on their mortgage payment than renters. To put that in perspective, the median monthly gross rent was $1,487 in 2024, according to LendingTree, while the median monthly housing costs for homeowners with a mortgage was $2,035. That’s nearly $550 more per month for owning a home, amounting to a difference of more than $6,500 annually.

And that cost difference makes buying a home just another “expensive indulgence,” Collins argued.

“People typically buy the most house they can possibly afford. The industry drives them that way,” Collins said. “You’re going to wind up with a house that’s going to be a burden. You are not buying it from a position of strength. You are stretching to buy it. You are borrowing the most money a bank’s willing to give you.”

To be sure, Collins would know about the costs of home ownership—he’s owned homes for most of his adult life, he said. And on top of a mortgage, homeowners should expect paying for furniture, new appliances, landscaping, taxes, and maintenance. 

“The list is endless,” he said. “Your mortgage is just the starting point.”

Matt Schultz, LendingTree’s chief consumer finance analyst, said in a statement shared with Fortune he understands those figures can be discouraging for people hoping for home ownership.

“Some people are becoming resigned to the fact that they’ll never be able to own a home,” he said. “That sort of decision has massive ramifications, not just for individuals but for the economy as a whole. Unfortunately, however, that doesn’t seem likely to change anytime soon.”

That’s in line with what other housing market experts and economists have predicted about the housing market for this year. While mortgage rates might drop slightly, the hidden costs of home ownership remain—and home prices aren’t going to drop enough to make a significant difference.

According to Realtor.com data shared with Fortune, at least one of three things would need to happen to make buying a house in the U.S. more affordable for the average person: Mortgage rates would need to fall to 2.65%; median household income would need to rise by 56%; or home prices would need to decline by 35%. Each of these scenarios is unlikely to happen.

“We’re in a tough spot,” Max Slyusarchuk, CEO of A&D Mortgage, previously told Fortune.. “The moment you make strides in any of these factors, what happens? More people are in the market buying and selling homes, which in turn increases the demand, which raises prices back up.”

This story was originally featured on Fortune.com