Is Homeownership Worth It? A Look at the Real Costs and Benefits

Is Buying a Home Still Worth It? It Depends.

Homeownership can build wealth, but it can also drain your cash flow. Before you buy, make sure you understand the true cost and whether it fits your goals.

Homeownership is often called the American dream, but it’s a big financial commitment. And one that comes with both meaningful benefits and sneaky costs. Whether you're thinking about buying your first home or reassessing whether owning still makes sense for your goals, it’s worth understanding what’s really involved.

Here’s a closer look at some of the key factors that impact the financial side of homeownership.

Tax Benefits: What Still Exists, and What’s Changed

Mortgage Interest Deduction

Homeowners can deduct mortgage interest on loans up to $750,000 if they itemize deductions. This can provide a meaningful tax break — but only if your itemized deductions exceed the standard deduction, which is currently quite high. For many people, especially those with smaller loans or who live in lower-tax states, this deduction doesn’t actually reduce their tax bill.

Section 121 Exclusion (Capital Gains on Sale)

If you’ve lived in your home for at least two of the last five years, you can exclude up to $250,000 of capital gains from taxes when you sell ($500,000 if married filing jointly). This can make homeownership more tax-efficient than other investments, especially in fast-growing markets.

The Costs You Don’t See in the Listing Price

Property Taxes

Property taxes vary by location and tend to rise over time as home values increase or local budgets grow. In some areas, this can become a surprisingly large annual expense.

Maintenance and Repairs

A good rule of thumb is to budget 1 to 2% of your home’s value each year for upkeep. That doesn’t include big-ticket items like roof replacements or unexpected plumbing issues. Unlike renting, you’re on the hook for everything, and costs can be lumpy.

Insurance

Homeowners insurance has been rising across the country due to inflation, natural disasters, and changes in risk models. In some regions, coverage is getting more expensive or harder to secure altogether.

Realtor Fees (Usually Paid by the Seller)

If and when you sell, it’s common for the seller to cover the real estate commission (usually 5 to 6% of the sale price), split between the buyer’s and seller’s agents. Buyers don’t typically pay these fees directly, but they’re still built into the price of homes. And if you're selling, this cost can take a real bite out of your proceeds.

High Transaction Costs

Between agent fees, title and escrow costs, home prep, and moving expenses, buying and selling a home can cost tens of thousands of dollars. That’s one reason why owning only makes financial sense if you plan to stay put for a while, ideally five to seven years or more.

Interest Rates: Timing Matters

When mortgage rates go up, affordability goes down. A home that was well within reach at a 3% rate might feel out of budget at 7%, even if the price hasn’t changed. Higher rates also mean more of your monthly payment goes to interest, especially in the early years.

To put that in perspective:

Let’s say you’re buying a $600,000 home with a 30-year fixed mortgage and no down payment (just to keep the math simple):

• At a 3% interest rate, your monthly payment (excluding taxes and insurance) would be about $2,530, and you’d pay around $910,665 total over the life of the loan.

• At a 7% interest rate, that monthly payment jumps to about $3,990, and the total paid over 30 years comes to $1,437,053. That’s more than $525,000 in additional interest.

That’s why interest rates aren’t just a footnote. They can completely reshape what affordability looks like, and even change the long-term financial case for renting vs. buying.

A Few More Things People Don’t Always Talk About

Your Home Isn’t Always an Investment

It’s easy to think of your house as a wealth-building asset, and over time, it can be. But your primary residence doesn’t generate income, it requires constant spending, and it can be difficult to sell quickly. It’s more accurate to think of it as a lifestyle choice with potential upside.

Homeownership as Forced Savings

That said, owning a home can help people build wealth through “forced savings.” Each mortgage payment builds equity over time, and that discipline can be powerful, especially for people who find it hard to save consistently elsewhere.

It Can Limit Career Flexibility

Being tied to a home can make it harder to relocate for a job or take time between roles. If flexibility or mobility is a big priority for you, renting might offer more freedom at this stage in life.

So… Is Owning Still Worth It?

Homeownership isn’t a one-size-fits-all decision. Here are a few questions to think through as you weigh whether it’s the right move:

• How long do you plan to stay?
  Because of the high transaction costs involved in buying and selling, owning typically only makes financial sense if you plan to stay put for at least five to seven years.

• How stable is your job or location?
  If there’s a chance you’ll need or want to move for work, family, or lifestyle in the near future, renting may offer more flexibility.

• Can you comfortably afford the full cost of ownership?
  That includes the mortgage, but also property taxes, insurance, ongoing maintenance, and unexpected repairs. Stretching too far can make homeownership more stressful than rewarding.

• What does the housing market look like right now?
  Are home prices in your area relatively reasonable, or have they been climbing rapidly? Are you buying into a market that’s likely to hold its value, or one that may be overheated? Timing can make a big difference.

• Does owning a home align with your lifestyle goals?
  If you’re craving stability, a sense of community, or the ability to customize your space, owning might be a great fit. If you prioritize freedom and low overhead, renting might feel better (especially in high-cost markets).

• Would your money work harder elsewhere?
  In some cases, investing the money you’d use for a down payment can build wealth faster than tying it up in a home, particularly if appreciation is slow or ongoing costs are high.

The Bottom Line

Homeownership isn’t just about getting approved for a mortgage. It’s about everything that comes with it: taxes, repairs, risk, equity, and how it all fits into your larger financial picture. If you’re weighing whether to buy, sell, or stay put, I’d be happy to help you run the numbers and talk through what makes the most sense for your life.