Over the Long Term, Owning is Better than Renting

In today’s market, an increasing number of savvy consumers are asking themselves whether they should rent or own a home. While there are many factors to consider in deciding whether to buy or rent, the most important questions to ask are:

"Can I afford to buy?"
"Is homeownership a good investment?" and
"How long do I plan to stay in my home?"

The answer to the first question may well be that you can’t afford NOT to buy, None of the money you spend on rent is returned to you, either through savings or as an investment.
Homeownership, on the other hand, has tax advantages over renting. And homeownership allows you to leverage your money.

When considering the investment value of a home, think about this: Dollar for dollar, the rate of return on an individual’s cash downpayment on a house is substantial. Buyers typically use their own money to cover only a small portion of the purchase price, but the home appreciation they realize is based on the total value of the property.

Homeowners benefit from the power of leverage. Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield $23,600. The same investment as a down payment on a $200,000 home at a normal appreciation rate of 5 percent would return nearly five times the average stock market return, at $110,300.

Homeownership is how many American families begin to accumulate wealth. According to data from the Federal Reserve Board, a homeowner’s net worth is 46 times that of a renter’s.

Housing is not a quick-in, quick-out investment. When purchased for the long term, housing is one of the safest investments consumers can make. In addition to the savings accumulated through a buildup of equity and tax advantages, a home provides shelter. No paper investment provides this benefit.

Of course, homeownership is not just about money. Homeownership provides shelter and security to families, and fosters involvement in community life as well as participation in democratic institutions. Homeownership also provides important social and economic benefits. It is the cornerstone of a healthy community and the basis for positive community involvement.