The rent crisis is about to get a lot worse) conducted to explore the cost and benefit of renting vs buying found that the number of households which could be spending at least half of their income on rent could increase 25% (increasing to 15 million households) over the next decade.
Eric Belsky is Managing Director of the Joint Center
of Housing Studies at Harvard University. He also currently serves on
the editorial board of the Journal of Housing Research and Housing
Policy Debate. Last year he released a paper on homeownership - The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home.
Here are the five reasons, each followed by an excerpt from the study:
1.) Housing is typically the one leveraged investment available.
“Few households are interested in borrowing money to buy stocks
and bonds and few lenders are willing to lend them the money. As a
result, homeownership allows households to amplify any appreciation on
the value of their homes by a leverage factor. Even a hefty 20 percent
down payment results in a leverage factor of five so that every
percentage point rise in the value of the home is a 5 percent return on
their equity. With many buyers putting 10 percent or less down, their
leverage factor is 10 or more.”
2.) You're paying for housing whether you own or rent.
“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”
3.) Owning is usually a form of “forced savings”.
“Since many people have trouble saving and have to make a housing
payment one way or the other, owning a home can overcome people’s
tendency to defer savings to another day.”
4.) There are substantial tax benefits to owning.
“Homeowners are able to deduct mortgage interest and property
taxes from income...On top of all this, capital gains up to $250,000 are
excluded from income for single filers and up to $500,000 for married
couples if they sell their homes for a gain.”
5.) Owning is a hedge against inflation.
“Housing costs and rents have tended over most time periods to go
up at or higher than the rate of inflation, making owning an attractive
Call me and we can visit about your purchase options.