Both owning and renting will cost you money (on average). Generally if you are living in a place where you can't afford to buy, you also shouldn't rent in the

Both owning and renting will cost you money (on average). Generally if you are living in a place where you can't afford to buy, you also shouldn't rent in the same neighborhood. But that's not what happens -- e.g. people move to San Francisco and then see the high house prices and convince themselves they can afford to rent there but not own. It's not cheaper to rent, on average [there is a lot of variability and opportunity for trading gains in real estate due to leverage] -- but overall, the price of these two is comparable, however renting is a more accessible way to overspend than owning. As a result of this increased accessibility, rental property prices are higher than they should be, due to increased demand, and what actually happens is that people who rent tend to lose more, on average, than those who own, because they are more likely to overspend on rent, given their income and financial situation. If prospective renters had to go through the same third party vetting processes as those who take out a mortgage - everything from an independent assessment of the value of the property, an inspection, third party vetting of your financial history -- you would also see a reduction in foolish renting choices and then renters would not, on average, experience greater losses than owners. But right now they do.