Owning a home has long been considered a central tenet of financial freedom. In the modern economic environment, however, whether it makes more financial sense to buy a home or continue renting is far more nuanced than it once was.
Historically, a common method for determining when to buy a house was to examine your income relative to your target home’s market price. If the home’s price was 3 to 5 times your annual gross household income, you could purchase it. But in recent years, home prices have risen faster than incomes, so this affordability metric has lost some of its appeal.
In general, Scott Galloway — a thought leader in tech and business — eschews the idea that a home purchase is part of “the American Dream,” especially in this day and age when home ownership is out of reach for many young Americans. His basic attitude toward home purchasing is not to get too emotional or hung up on buying, and instead focus on the math that makes financial sense.
Here’s a detailed look at how Galloway advises his listeners to examine renting vs. homebuying in the modern financial landscape.
Examine the price-to-rent ratio in your area
When discussing homebuying, Galloway frequently references a metric called the price-to-rent ratio. The price-to-rent ratio compares the median home price to the median annual rent in a particular area.
For example, in Houston, the median price for a single-family home was around $332,000 in April 2026, according to the Houston Association of Realtors. The monthly median rent in Houston was $1,433 in May 2026, which translated to $17,196 a year, based on data from Zumper, which compiles rental prices. Using both sets of data, the price-to-rent ratio in Houston was 19 in spring 2026.
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When is it better to buy?
Galloway said in a clip titled ”Should You Still Be Trying to Own a Home?” in his Office Hours channel on YouTube that a price-to-rent ratio below 15 favors buying a home. That suggests a market where the median home price was around $250,000 and median yearly rent was about $25,000 for a ratio of 10.
According to SoFi, some cities where the price-to-rent ratio was 15 or lower included Indianapolis, Philadelphia, and Baltimore. Detroit was among the lowest, with a ratio of just above 7.
Galloway mentioned in his YouTube clip that Nashville and Lubbock, Texas, are cities where buying a home could make more financial sense than renting.
Buying a home is, “generally speaking, a good idea,” Galloway said. “Why? Because it’s for savings. People will cancel their Netflix or they sell a stock if they get in trouble or need the money. People will very rarely miss their mortgage payment and get evicted from their home. So it’s forced savings, forces you to be a bit more responsible. And also the earnings or the appreciation, the capital appreciation of home grows tax deferred until you sell it.”
When is it better to rent?
Galloway suggested that a price-to-rent ratio above 20 favors renting. Major cities such as San Francisco have ratios well above 20, and in those places, it usually makes more sense to rent, he said. Sofi’s compilation of major U.S. cities put San Francisco’s ratio at 36, Los Angeles’s at 32, Portland, Oregon’s at 29, and Boston’s at 21. In New York City, across the five boroughs, the ratio was 16, but in Manhattan alone, it was around 25.
“Sometimes renting is the way to go,” Galloway said. “Chasing home ownership for some sort of psychological benefit when it doesn’t make any sense is not a great idea.”
Galloway also says that there’s an added benefit to renting over buying. Whatever income remains after paying rent (that would have otherwise been put toward a down payment or property tax) can be invested in other assets, such as stocks, thereby increasing wealth.
AD Mortgage, a leading wholesale lender in the U.S., released a report titled The 10-Year Rent vs. Buy Wealth Study and found that homeownership outperformed renting in 80% of the 250 U.S. cities analyzed over a 10-year period, using Zillow home values.
Still, those who rented in certain areas benefited. In a smaller set of cities — often high-cost or low-growth markets — the renter-investor path outperformed homeownership on a 10-year horizon, according to Housingwire, a website that reports on the housing market.
Another metric on home affordability
Additional metrics exist that can help indicate whether a family is better off owning a home rather than renting in certain circomstances.
The Federal Reserve Bank of Atlanta compiles the Home Ownership Affordability Monitor, which “measures the ability of a median-income household to absorb the estimated annual costs associated with owning a median-priced home.”
Nationally, the share of a household’s median income that goes toward total monthly home payments — which include property taxes, private mortgage insurance, property insurance, principal, and interest — was 42% in March 2026. That was above the affordability threshold of 30%.
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The share of median household income spent on home costs was largely below 30% from January 2009 (amid the global financial crisis of 2008–2009) to March 2021, a year after the COVID-19 recession. However, following COVID-19, home prices started to rise significantly, and the share of median income spent on home costs peaked at 45% in 2023 and 2024.
Galloway cautions listeners to examine their own psychology when it comes to homebuying attitudes — the bottom line, he advises, is to be pragmatic and financially astute.
“Look, unless you’re going to get a ton of psychic reward from buying right now, I would probably say hold off,” Galloway said in his May 2026 YouTube clip. “And also, don’t feel ashamed to rent versus own.”
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