Happy House Hacking Podcast EP 50: Renters vs. Owners: The Real Cost of Waiting

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Home Ownership vs. Renting: The Real Cost of Waiting

The path to financial stability and long-term wealth often runs right through the front door of a home. Yet, in today's market, many people—especially the first-time home buyer—feel paralyzed by the perceived high costs, high interest rates, and overall complexity of the process. They opt to keep questioning renting vs. owning, often waiting for the perfect market conditions that may never materialize, delaying the ultimate goal of home ownership.

At The Schwaegerle Team, we believe that every individual and family deserves the security and wealth-building power of home ownership. So, on a recent episode of our Happy House Hacking podcast, we unpacked the common objections we hear from renters, such as the house being too expensive, having to give up flexibility, or not being able to find the right property. Learn why delaying your purchase can be the most expensive decision you’ll ever make.

The Long-Term Financial Cost of Waiting for Home Ownership

The perception that it's "too expensive" to buy right now prevents many first-time home buyers from achieving home ownership. However, when we analyze the long-term data for renting vs. owning, the financial cost of inaction—the opportunity missed for building equity—far outweighs any temporary benefit, ultimately delaying your path to financial freedom. 

The Relentless Cost of Renting

When you have a locked-in fixed-rate mortgage, it's not going up. But rent? It is subject to rent inflation every year. It is relentless. Owen Schwaegerle noted the real-world impact, sharing that in just a 10-year period in California, "...rents went up 35%."

Think about the money you pay the landlord. Let’s say you’re paying $2,500 a month for a year—that's $30,000. That money goes directly to the landlord, who uses it to pay down their loan and benefits from the equity appreciation. You receive no benefit back from it. 

Over a five-year period, that’s a $150,000 investment with no return. That money could have been used for your own principal pay down. This is the stark reality of the cost difference between renting vs. owning.

The Power of Building Equity

With a mortgage, you still have principal pay down every single month. While a significant portion goes to interest, that principal pay down is what is building equity and your overall net worth and stability. Even if your mortgage is slightly higher than your rent, data shows that homeowners for five plus years are in a better financial position than if they rented for the same period, purely from building equity.

The Path to Financial Freedom

Financial freedom is the ultimate measure of security and opportunity derived from home ownership. The statistics on net worth for renters versus homeowners are staggering. As Owen stated, "The median net worth of a renter is about $10,000 and the net worth of a homeowner is about $400,000."

This massive nest egg provides options, freedom, flexibility, and a future for retirement, which is the definition of financial freedom. This security is only achieved through the stability of home ownership.

Addressing the Top First-Time Buyer Objections

Every first-time home buyer faces mental roadblocks to home ownership. We constantly hear three major objections—cost, responsibility, and timing—that relate directly to concerns over home affordability and flexibility. Our goal is to show you why these are simply limiting beliefs, not impassable barriers. 

Objection 1: "It's Too Expensive"

It is absolutely true that home affordability is a huge challenge. Camille Schwaegerle noted that a standard three bed, two bath home, especially here in San Luis Obispo, "...is gonna be a million plus dollars." That’s why we have to look beyond the ideal home.

To get your foot in the door, sacrifice is necessary. Camille stated, "We ended up downsizing into a 490 square foot apartment...it wasn't in our top ideal location. It wasn't close to our work. It wasn't in turnkey condition." Sometimes you have to make a big sacrifice to get to the next stage of home ownership. You don't need perfection when it comes to your first home. You just need a plan to start building equity.

The belief that 20% down is required for home ownership is just not true. There are so many subsidized government-backed loan programs where you can get in for less. We have clients getting in on 3% down payments, 3.5% down payments.

Our team recently helped a couple achieve their goal by only bringing $12,000 to the closing table, and we were able to negotiate a significant closing cost credit from the seller. We can also explore down payment assistance programs, like CalHFA, that provide grants to help you cover closing costs. There are multiple options to improve home affordability and allow a first-time home buyer to enter the market.

Objection 2: "I Don't Want the Responsibility"

While renters avoid the cost of repairs, they give up a huge amount of certainty. You don’t know when your landlord is going to sell or ask you to leave, leading to a lack of long-term stability. The stability gained through home ownership is significant. Home ownership isn't a burden; it gives you control over your living situation and your financial future, which is invaluable.

Objection 3: "I'm Not Ready"

The phrase "I'm not ready to buy" is actually costing you money in the long-term. Owen shared a shocking statistic that proves the cost of inaction for the first-time home buyer: “If you look back at 2020, the median sales price for a home in San Luis Obispo County was $617,000. Five years later, 2025, the median sales price is $910,000. Five years, $300,000 in price appreciation. The longer you wait to get in the game, the more you're missing out."

The cost of waiting means you're losing out on market appreciation and the equity creation that comes with home ownership. Your first home is part of the "starter home concept": a house you keep for a few years to build equity, sell, and upsize. It’s a financial stepping stone, not a permanent commitment, which ultimately leads to financial freedom.

The First-Time Home Buyer Bootcamp

We know that taking the leap into home ownership feels overwhelming, but the process is manageable with a clear strategy. You’ll need a step-by-step action plan to move from renting to building equity, securing down payment assistance, and achieving financial freedom. 

Step 1: Get Your Financial House in Order

• Review Your Spending: Print out your bank statements and use a highlighter system—Green (keep), Yellow (question), and Red (cut immediately)—to increase savings.
• Focus on Debt Paydown: Improve your debt-to-income ratio. If you're willing to make the sacrifice, rapid debt paydown is possible.

Step 2: Connect with Professionals

• Talk to a Lender: This is the next step to address home affordability. See what loan programs you qualify for, including FHA (3.5% down), Conventional (3% down), and programs for down payment assistance.
• Talk to a Real Estate Agent: Reach out to The Schwaegerle Team for a strategy meeting on the home ownership process.

Step 3: Explore Creative Options

• Buy a Multi-Unit Property: You can buy a multi-unit property (duplex, triplex, or fourplex), live in one unit, and rent out the others.
• Rent Out Extra Bedrooms: Rent out extra bedrooms in your primary residence to bring in extra income, which in San Luis Obispo can be $1,000-$1,500 per room.
• Add an ADU: Convert a garage or build an ADU (Accessory Dwelling Unit) for extra rental income.

Step 4: Go Shopping and Set Realistic Expectations

• Search Conservatively: Look at homes below your pre-approved maximum to build a buffer. Just because you can afford a $700,000 payment doesn't mean you should spend that much. 
• Sacrifice for a Season: Be willing to accept a less ideal location or a property that needs work. You are sacrificing short-term comfort for the long-term benefit of building equity.

Step 5: Make the Offer

• It’s Not a Final Obligation: The offer process is simply the next step in your first-time home buyer journey.
• Understand Contingencies: We use contingencies (inspection, loan, appraisal) to protect the buyer and ensure you’re satisfied with the property before closing.

Taking the Leap to Financial Freedom

The long-term cost of delaying home ownership is substantial. The decision to wait, often based on concerns about home affordability, results in missing out on years of building equity and the compounding wealth that leads to financial freedom. The time to start is now, even if it means rethinking the definition of a starter home and exploring options like down payment assistance. First-time home buyers need to move beyond limiting beliefs and craft a realistic game plan.

At The Schwaegerle Team, we believe that education and strategy are the true keys that unlock the door to home ownership. If you’d like to learn more about the home ownership and equity building processes, listen to the rest of the Happy House Hacking podcast!