There’s no question that homeownership in the United States has been a proven vehicle for building wealth. In nearly every neighborhood, you’ll hear stories of couples who bought a home decades ago, raised their children and eventually “cashed out,” walking away with a bundle.
But with elevated mortgage rates and stagnant home prices in many regions, the decision to rent or buy has become more complex—especially when compared to another common wealth-building strategy: investing in the stock market.
To explore this, KTLA analyzed single-family home sales data from the past decade and compared it to the performance of major market indexes. We also spoke with experts in business, real estate and consumer finance. Here’s what we found.
The case for homeownership
Over the past 10 years, the median U.S. home price has risen significantly. According to the Federal Reserve Bank of St. Louis, the median price increased from $289,100 in April 2015 to $410,800 in April 2025: a 42% increase over the decade.
Some regions, particularly in the Northeast and major West Coast cities, have seen even stronger growth.
For instance, a home in Los Angeles that cost $427,000 in 2015 is now worth approximately $951,000, based on Zillow data. A home purchased for $707,000 in San Francisco in 2005 could be worth $1.6 million today.
For homeowners leveraged with mortgages—or, even better, no mortgage—the returns have been impressive. Even if your mortgage isn’t fully paid off, you’ve likely built substantial equity.
Mortgage interest is still tax-deductible for most homeowners, up to $750,000. Additionally, when you sell your home, up to $250,000 in capital gains ($500,000 for married couples) may be excluded from taxes if you meet IRS requirements.
Anne Russell, current president of Greater Los Angeles Realtors, says the answer to the question of whether to rent or buy is a no-brainer.
“The minute you’re not building equity for somebody else, you’re building it for yourself, and that’s really the name of the game,” Russell told us. “It’s not instant cash in your pocket, but you are living in a home you control, building community, and creating stability for yourself and your family.”
Despite costs like insurance, property taxes and repairs, Russell argues that homeownership is still a common denominator among wealthy Americans.
“Just look at the net worth of people,” she says. “We know today that a renter typically has a net worth of about $10,000. A homeowner has a net worth of about $430,000. Do the math.”
Even if you prefer to rent your personal residence, Russell suggests purchasing a home as an investment.
“For first-time home buyers, I offer this advice: if you can’t afford a house where you want to live, buy one somewhere else. Rent it out, cover the mortgage, and watch the equity grow,” she said.
The case for stocks
While real estate has delivered solid returns, U.S. stocks have outperformed homes in many cases, particularly since the Great Recession.
From April 2015 through July 2025:
- Dow Jones Industrial Average: +154.8%
- S&P 500: +210.6%
- NASDAQ Composite: +334.6%
As noted, national home prices rose about 42% over the same period.
If you had invested $100,000 in index funds back in April 2015, you’d have about $248,300 in the Dow Jones by July 2025. That same investment would have grown even more in the S&P 500, to around $306,500, and it would have really soared in the tech-heavy NASDAQ, reaching an impressive $432,100.
If you had started with $200,000, it would now be worth nearly $496,600 in the Dow, about $613,000 in the S&P 500, and $864,200 in the NASDAQ. And these figures don’t include reinvested dividends, which would further boost returns.
Financial experts we spoke with caution that while paying rent may be a lousy investment, that doesn’t automatically mean a large down payment with monthly mortgage is a good one.
“The belief that buying a home in California is the smartest financial move you can make is the most dangerous piece of financial folklore for this generation,” argues William Stern, co-CEO of Cardiff, a small business lender based in San Diego. “It’s a decision driven by societal pressure and emotion, not by the cold, hard math of wealth creation.”
Stern argues that many buyers are driven by lifestyle preferences—like school districts or proximity to work—without fully considering the financial implications.
“Homeowners ignore the ‘phantom costs’ that build zero equity,” he says. “In California, property taxes, insurance, and HOA fees can easily total thousands per month. Add the standard 1-2% of the home’s value for annual maintenance, and you are often spending an amount that eclipses the ‘equity’ you’re building, vanishing into thin air just like rent.”
So, what’s the right move?
“There are a lot of moving parts to the question, depending on one’s financial situation,” says KTLA consumer reporter David Lazarus. “The key thing to keep in mind is whether you want the relative flexibility of being a renter, without the hassles.”
A recent study found that renting is cheaper than paying a mortgage in all large U.S. metropolitan areas. According to Bankrate, the average mortgage payment costs 38% more per month compared to average rent.
Bill Nugent, a certified financial planner, says both real estate and stocks are good long-term investments, but liquidity is another important factor to consider.
“If that real estate rises in value, that gain isn’t accessible without selling or refinancing,” he says. “I tell all of my clients, the numbers are important but we don’t live our lives on a spreadsheet. Each person’s goals and situation will differ and what makes perfect sense for one person may not be a good idea for the next.”
Lazarus says the most critical part of this equation is time.
“The best rule of thumb is to have a sense of your long-term goals,” he says. “If you want to build equity, put down roots, and stay put for years, then homeownership is the smarter choice. If you want to keep your life financially simple and have the freedom to blow with the wind, then renting is probably the ticket.”
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