We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all links contained within this article are paid links.
Jamie, 28, recently married her long-time boyfriend, Ben. They’ve always been careful with their money as a couple, sticking to a monthly budget and saving 15% of their salaries. They even opted for a small, simple wedding rather than racking up debt.
Jamie and Ben rented a small one-bedroom apartment when they moved in together five years ago. It made sense at the time. They were just starting out in their careers and liked to have some extra money for dining out and entertainment.
Don’t miss
Now they’re thinking of starting a family and are not so keen on renting. Jamie has always wanted to own her own home and she doesn’t want to raise kids in a rental apartment.
But since current home prices and mortgage rates make it a “lousy” market for people looking for starter homes, Jamie’s wondering if it makes more sense to invest in the S&P 500 and save as much as possible while continuing to rent.
To rent or to buy?
U.S. home prices were up 0.7% in May compared to the same time last year, according to Redfin, selling for a median price of $440,913.
Rates for 30-year fixed-rate mortgages also remain relatively high, still below the 7% threshold, but averaging 6.81% as of June 18, according to Freddie Mac.
These factors may help explain why demand — often understood through existing home sales — “remains exceptionally low,” according to JPMorgan’s home price outlook for 2025,
“The U.S. housing market is likely to remain largely frozen through 2025,” JPMorgan Research reports. “Some growth is still expected, but at a very subdued pace of 3% or less.”
That leaves many potential homebuyers wondering when — or if — there’s going to be a good time to buy a new home.
Over the next two years, home prices may drop as housing supply grows, and mortgage rates could fall with Treasury yields, according to Morgan Stanley strategists.
But, as the investment bank notes, that doesn’t necessarily mean “a return to the pre-pandemic era of more affordable mortgages and home prices.”
Meanwhile, 2025 has so far been a renter’s market, with rents falling as the supply of rental units grows. That’s thanks in part to the appearance of new units on the market as pandemic-era projects are completed.
However Realtor.com notes that this effect could be short-lived, as lower rent disincentivizes developers from building rental buildings. That could lead to a rental housing pinch.
But lower rent doesn’t mean low. Rents are still 14.4% higher than they were five years ago, according to Realtor.com.
Buying a home might stretch your budget more than renting. But it can come with perks — like building equity and having a place that’s truly yours. Plus, you won’t have to deal with surprise rent hikes or sudden eviction notices from a landlord.
Even though mortgage rates are high, it doesn’t mean you can’t get bang for your buck. Shopping around and comparing rates from different lenders can help you save an average of $80,024 over the lifetime of a 30-year fixed-rate mortgage, according to a recent LendingTree analysis.
Shopping around doesn’t have to mean calling lenders and dealing with the hassles of nonstop sales calls. Instead, you could let marketplaces like Mortgage Research Center help you compare rates from multiple lenders all in one place — for free.
Getting started is easy. Just enter some basic information about yourself and your property preferences then MRC will display personalized offers from vetted lenders near you.
From there, you can compare rates and, once you pick a lender you like, set up a free, no-obligation consultation to see if they’re the right fit.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Weighing the pros and cons
Both stocks and home equity can provide a path to wealth. Historically the stock market has provided a 10% average annual return, while the housing market has seen smaller gains.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which tracks residential real estate prices, showed a 2.7% annual return as of April 2025.
But returns are not the only consideration. Stocks provide greater liquidity than real estate, yet the market can be volatile.
Accredited investors can try to get the best of both worlds by tapping into the approximately $35 trillion U.S. home equity market.
With a minimum investment of $25,000, accredited investors can get direct exposure to hundreds of owner-occupied homes across the U.S. through Homeshares’ U.S. Home Equity Fund.
The fund focuses on homes with substantial equity, utilizing Home Equity Agreements (HEAs) to help homeowners access liquidity without incurring debt or additional interest payments.
With risk-adjusted target returns ranging from 14% to 17%, the U.S. Home Equity Fund could unlock lucrative real estate opportunities, offering accredited investors an effective, hands-off way to invest in high-quality residential properties without the headaches of buying, owning or managing them.
Plus, the fund has an investment term of five years — in contrast to the decades-long horizon of traditional real estate investments.
Buying a home now
PROS: If Jamie and Ben buy a home now, they can start building equity immediately. Real estate comes with a number of benefits, such as property appreciation, tax advantages and the potential to bring in rental income.
CONS: But buying a home can also have high initial costs from the downpayment and closing fees, not to mention the ongoing expenses from property taxes to utilities and unexpected repairs. These could add up to more than the cost of Jamie and Ben’s current rent.
Renting and investing in the S&P 500
PROS: If Jamie and Ben continue to rent and instead invest extra money in the S&P 500, they could see higher returns over time than with real estate. Renting gives them freedom and flexibility.
CONS: Stock market volatility could mean they have to delay homeownership even longer.
If, like Jamie and Ben, you’re uncertain which asset would best suit your needs, it’s worth consulting a professional.
You can find vetted experts near you for free through WiserAdvisor.
Once you fill out the questionnaire with some basic information about yourself and your financial goals, WiserAdvisor will match you with 2-3 pre-screened FINRA/SEC-registered experts. This means that your roster of potential advisors have to act in your best interests by law.
Finding a good financial advisor can lead to a lifelong working relationship for navigating life’s twists and turns. It’s important to be comfortable with who you’re working with.
WiserAdvisor helps you set up a free introductory consultation with no obligation to hire with your matches before making a decision to hire one.
That way, you can make sure your advisor is the right fit for you and your financial goals — regardless of whether you chose to rent or buy property.
What to read next
Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.