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
proposition.”
Bottom
Line
We realize that homeownership makes
sense for many Americans for an assortment of social and family reasons. It
also makes sense financially.
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