Owning a home has great financial benefits.
In a recent research paper, Homeownership and the American Dream Laurie S. Goodman and Christopher Mayer of the Urban Land Institute explained:
Let’s breakdown 5 major financial benefits of homeownership:
Homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. A 20% down payment results in a leverage factor of five, meaning every percentage point rise in the value of your home is a 5% return on your equity. If you put down 10%, your leverage factor is 10.
Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are baked into the rent payment already – along with a profit margin!!
Studies have shown that homeowners have a net worth that is 44X greater than that of a renter. As a matter of fact, it was recently that a family buying an average priced home this past January could build more than $42,000 in family wealth over the next five years.
House values and rents tend to go up at or higher than the rate of inflation. When you own, your home’s value will protect you from that inflation.
We know that the new tax reform bill puts limits on some deductions on certain homes. However, in the research paper referenced above, the authors explain:
From a financial standpoint, owning a home has always been and will always be better than renting.