Real estate investor Pace Morby recently sat down with the hosts of The Iced Coffee Hour and dropped a line that cuts to the core of the argument for whether it’s best to buy a home or rent and invest the difference. In Pace’s opinion, most people who rent won’t invest the difference because they will “just spend that on stupid shit.” He sees a mortgage as a “permanent savings account” that forces a household to build wealth, and “that is the American dream.”
A 30-year mortgage is the single largest financial commitment most households will ever make. Get the buy-vs-rent call wrong, and you can lock in years of negative equity, blow through closing costs you never recover from. But on the other hand, by renting and avoiding the massive commitment, individuals could watch a decade of potential equity evaporate into rent payments that build someone else’s wealth.
Morby Is Right About Behavior, But the Hosts Are Right About the Math
Morby anchored his case to a striking figure: the average renter has a net worth of roughly $40,000, compared with roughly $400,000 for the average homeowner. He argued the financially disciplined renter who actually invests the savings is a small minority.
The hosts pushed back hard. One argued the net-worth gap reflects “the type of person who’s able to save,” not the act of buying itself. The other preferred renting outright, citing closing costs, the risk of negative equity, and the trap of buying before you know where your career is headed.
Both sides actually agreed on the punchline: for a financially disciplined investor, renting and deploying the savings elsewhere can outperform buying. The advice splits on the behavioral aspect rather than the math itself.
Running the Numbers
Take a $400,000 home with 10% down. At a 6.75% interest rate, principal and interest might run roughly $2,335 a month before taxes, insurance, and maintenance. Add escrow and upkeep, and an all-in monthly cost near $3,200 could be realistic. If a comparable rental runs at $2,400, the renter has roughly $800 a month available to invest.
Assuming a 10% nominal return over 15 years, that contribution compounds into a meaningful portfolio. The homeowner, meanwhile, builds equity through amortization, price appreciation, and debt down payment, but pays closing costs at entry and exit that typically consume 8% to 10% of the sale price over the round trip. That is the math the hosts are pointing at, and it is real.
Morby’s rebuttal is also real. The U.S. personal savings rate in Q1 2026 was 3.9%, down from 5.2% a year earlier. Consumer sentiment sits at 44.8 in May 2026, deep in pessimistic territory. A household saving less than 4% of disposable income is unlikely to redirect an $800 monthly rent savings into an index fund every month for 15 years. The mortgage forces the behavior, whereas it’s easier to forgo investing if you aren’t forced to.
The One Variable That Decides Everything
The factor that flips this decision is whether the savings actually get invested every month.
One of the hosts laid out a clean buying framework: find a place you love, plan to stay 10 to 15 years, keep housing costs at 20 to 25% of gross income, and secure a competitive interest rate. That set of conditions handles the closing-cost drag, the negative-equity risk, and the career-mobility problem in one move.
If you cannot truly check those boxes, and you cannot reliably automate the rent-vs-mortgage difference into a brokerage account every month, Morby’s forced-savings argument wins by default.
How to Decide Between Renting and Buying
- Run the real monthly comparison. Price a specific home you would actually buy at current rates. Add taxes, insurance, HOA dues, and 1% of the home’s value annually for maintenance. Compare that to rent on a comparable unit. The gap is your investable difference.
- Stress-test your timeline. If there is any realistic chance you move within five years, the closing costs alone usually break the buy case.
- Automate your investing. If you plan to rent and invest the difference, set up the automatic transfer first. If the money stays in checking for two months, you have your answer about which side of the Morby debate you live on.
The right path is whichever one your actual behavior, rather than your imagined behavior, will reward.
Top Gaining Stocks
Top Losing Stocks