To rent or buy a house depends on the situation. The majority of millionaires and billionaires own real estate. However, if you buy a house, is it a good investment if over a third of your income is spent paying the mortgage and property taxes? Weather you buy or rent a home it all depends on several factors, but at this time, if you cannot afford the mortgage payment, then this section is for you.
The 2019 market is expensive and many can no longer afford homes. If you find yourself in this group then it may be wiser to invest in index funds until you have a sizable down payment of at least 20% so you can avoid paying PMI (Private Mortgage Insurance). There are disadvantages to buying a home; it is expensive, it ties you to a particular area, property taxes, insurance, mortgage, maintenance, HOA and so on. All of this money could be going into your brokerage account, where you could be earning dividends and participate in investment appreciation. Why direct all this money to purchase property when you can redirect it elsewhere?
If I were new to the real estate market renting would be the preferred option. Renting makes financial sense, especially in California where a run-down house is $500,000. Warren Buffett is a billionaire and he lives in a modest house he purchased for in 1958 for $31,500.00. It has appreciated over time, but it is still much less than 1% of his net worth. The rich are pragmatic in their way of thinking; the rich think of growing and collecting money and not things. I do own both a primary and rental in California, but if I was new to the market, I would be patient and rent at this point and wait for another housing correction. Just like stocks real estate will go up and down again.
In summary, think carefully before buying a home. It could be a money trap considering property taxes, insurance, maintenance, HOA and so forth, instead if you cannot afford the payments, direct that money that you would have spent on housing into a brokerage account and buy low-cost index funds or REITs (Real Estate Investment Trusts) that are growing and paying dividends.
Also, some food for thought regarding dividends. Dividends can be huge for your net worth. Consider if you invest $10,000 a year in a non-dividend stock for 30 years earning 7% you would end up with $761,000. I lot of money right? However, if you invest that same $10,000 per year in a dividend stock or better yet index fund that earns the same 7% but with a 2% dividend you would end up with $1,326,000.