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CAN BUYING A HOME BE AN AVENUE TO PRODUCING WEALTH?

Wednesday, March 16, 2016   /   by Sonya McVeay

CAN BUYING A HOME BE AN AVENUE TO PRODUCING WEALTH?

Study Again Finds Homeownership to be a Better Way of Producing Wealth

Is it better to rent or buy a home in today’s housing market?
Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index
 is a quarterly report that attemps to answer that question, here's what their latest finds
say,
The index examines the entire US housing market and then isolates 23 major markets for comparison. The researchers use a “'horse race' comparison between an individual that is buying a home and an individual that rents a similar quality home and reinvests all monies otherwise invested in homeownership.”

Ken Johnson Ph.D., Real Estate Economist & Professor at Florida Atlantic University, and one of the index’s authors states:

“The nation as a whole is in buy territory. Continued near record low mortgage rates, unsteady stock market performance, and rents (on average) now out pacing the cost of ownership (maintenance, taxes, insurance, etc.) all combine to favor owning and building wealth through home equity over renting and reinvesting in a portfolio of stocks and bonds.” 

Bottom Line

Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year, so lock in your housing cost with a mortgage payment now.