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

HOUSTON, Texas -- Owning a home is a part of the "American Dream." Right? That has at least been engrained in many of our minds.

With high home prices and interest rates, should some of us just give up on that part of the dream?

"I'm a Zillow queen. I'm always on there looking like, 'OK. Well, what can I afford?'" prospective homeowner Chantel McKinney said.

According to HAR, as of February 2024, the average price of a home in the greater Houston area is $391,080, pricing many people out.

About 60% of Houstonians are renters.

So, should the goal in this day and age even be to own a home?

"I think as a millennial, the American dream of owning a home is kind of faltering when it comes to us," McKinney explained.

McKinney said she's saving now, so hopefully, she can afford a home soon. This is exactly what Sarah Mizell, a financial advisor with Cove Wealth Management, suggests.

"A lot of times, people are renting, and they want to buy, and they feel stuck renting, and that is a frustrating feeling. Simply overreaching and buying something doesn't take that stuck feeling away," Mizell explained.

Mizell said there are plenty of pros to renting. It buys you flexibility if you do need to move, and you are not on the hook when things break.

If you're trying to decide whether to keep renting or to buy, here are some of the questions she suggests you ask yourself:

• How much should you spend on a home?

• How much do you have saved?

• How long are you planning to live in the home?

Your housing costs should be around 25% of your income. If you buy, that 25% should include your mortgage, taxes, insurance, any HOA fees, and about 1% to 2% of the cost of your home set aside each year for maintenance.

ABC13 did the math. On the average home here that costs nearly $400,000, you'll end up spending about $46,000 a year on all of those expenses. That means to afford it, you would need a household income of about $183,000.

That's of course, after you've forked over a lot of money for your down payment and closing costs.

Another important thing you should consider is how long you plan to live in the home. If it is less than three to five years, you're probably better off renting.

If you don't have the money yet and it is your dream to own a home, you don't have to give up on it altogether.

"Get comfortable knowing where your money is going and then make one small tweak every month for the next year that moves you in the direction you want to go," Mizell explained.

Mizell stresses having a budget, understanding it takes time to save, and making financial decisions that are best for your family, no matter what society says.

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