Alex Friedman, a 31-year-old content creator and entrepreneur, has an impressive history. She has founded three startups, successfully selling one of them. More recently, she took on the role of entrepreneur in residence for TechStars’ music program. However, after the unfortunate loss of a close friend, she decided to take a break.

Originally from Southern California, Friedman moved to Austin, Texas, about five years ago, joining the group of people humorously complaining about Californians moving in. Over the past few years, she considered buying a home.

In hindsight, she regrets not doing so during the pandemic when mortgage rates were as low as two or three percent, and home prices had not yet skyrocketed. At that time, being relatively new to Austin and navigating the real estate market alone during a pandemic in a new city was daunting.

Speaking from a boat in Qaqortoq, Greenland, where her break took her, Friedman shared her observations about the housing situation. She noted that during the pandemic, even dilapidated houses attracted crowds of potential buyers, some willing to make all-cash offers and skip inspections.

Though the pace has slowed, she still encounters properties needing significant renovation, priced above $800,000 to $900,000, well above Austin’s average home value.

“It was then that I realized buying wasn’t a wise investment,” Friedman commented. She explained that she and her partner currently live in a luxurious complex near downtown, a spacious 1,700-square-foot, two-bedroom, two-and-a-half-bathroom townhome for $3,500 a month. In her view, this offers more space and better quality than what she could purchase.

Why Some High Earners Are Hesitant to Buy Houses

Despite Austin’s home prices declining about 10% from their peak, they’ve risen more than 40% since March 2020, the start of the pandemic. Meanwhile, mortgage rates have more than doubled, making affordability an issue. In Friedman’s case, she can afford to buy in Austin, where the average home value is $557,292.

However, she questions the wisdom of such a decision. Her income isn’t a problem; she earned over $300,000 last year (she gave a ballpark figure as she prefers not to disclose the exact amount).

“I could buy a house; the issue is, after running the numbers, it doesn’t seem right for me,” she explained.

Friedman noted a significant income increase over recent years. As an entrepreneur, her earnings fluctuated, but she currently doesn’t see the value in buying a house, primarily because the monthly mortgage payments for a home meeting her criteria would surpass her current rent.

For example, if she were to take on a $650,000 mortgage (on an $800,000 house, a conservative estimate), with a 30-year fixed rate at 7.5%, her monthly payment would be $4,475, excluding taxes and insurance. That’s almost $1,000 more than her current rent for a luxury townhome with numerous amenities.

“The kind of house I desire, one that checks all the boxes, is currently beyond my financial reach,” Friedman remarked. “I prefer living in a luxury apartment complex with a gym, pool, safety, security, and freedom from maintenance responsibilities.”

Choosing Renting Over Buying: A Trend Among High Earners

She understands she could buy a fixer-upper or a less desirable house, but she’d rather spend her money on travel or saving for early retirement. Plus, she doesn’t struggle with rent payments.

Friedman isn’t alone among high earners choosing renting over buying. There are others, like a couple earning $275,000 a year who rent in San Antonio, Texas, to live in their preferred neighborhood, or a founder earning over $200,000 who rents in New York City because she can’t afford to buy in her ideal location.

The question is whether the traditional notion that renting is throwing away money while buying is an investment still holds true, especially for high earners with specific standards.

“I won’t buy a house unless the perfect opportunity arises or an irresistible deal comes along,” Friedman stated. “I genuinely appreciate the flexibility and simplicity that renting brings to my life.”

In her younger days, Friedman envisioned owning a home with a picket fence. However, that vision no longer resonates with her. Renting, in her current perspective, makes more sense. It comes with significantly fewer responsibilities than homeownership. Friedman doesn’t have to worry about property insurance or the relatively high property taxes in Texas.

However, she’s determined to stay in Austin, a city she attributes much of her personal growth to, especially thanks to its thriving tech scene.

“For me, what makes sense is having flexibility and the convenience of someone available to promptly address maintenance issues, like fixing a sink when needed. This allows me to travel and shape my life according to my preferences without the heavy responsibilities of permanent homeownership,” Friedman explained.

Conclusion

Alex Friedman’s story illustrates the evolving perspective on homeownership among high earners. Despite her ability to afford a house, the changing real estate landscape and her desire for flexibility make renting a more attractive option. Her experience reflects a broader trend challenging traditional notions of investing in real estate.

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