Owning A Home Always Better Than Renting

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:

 
“Homeownership appears to help borrowers accumulate housing and nonhousing wealth in a variety of ways, with tax advantages, greater financial flexibility due to secured borrowing, built-in ‘default’ savings with mortgage amortization and nominally fixed payments, and the potential to lower home maintenance costs through sweat equity.”

Let’s breakdown 5 major financial benefits of homeownership:

1. Housing is typically the one leveraged investment available

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.

Example: Let’s assume you purchased a $300,000 home and put down $60,000 (20%). If the house appreciates by $30,000, that is only a 10% increase in value but a 50% increase in equity.

 
2. You’re paying for housing whether you own or rent

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!!

3. Owning is usually a form of “forced savings”

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 estimated 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.

4. Owning is a hedge against inflation

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.

5. There are still substantial tax benefits to owning

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:

“…the mortgage interest deduction is not the main source of these gains; even if it were removed, homeowners would continue to benefit from a lack of taxation of imputed rent and capital gains.”

The Bottom Line

From a financial standpoint, owning a home has always been and will always be better than renting.

 

Affordable Central Florida Homes For Sale

238 GRIFFIN VIEW DRIVELADY LAKEFL32159
Save PropertyPhoto of 238 GRIFFIN VIEW DRIVE, LADY LAKE, FL 32159
238 GRIFFIN VIEW DRIVE

LADY LAKE, FL 32159

$264,900

Beds: 4, Baths: 2, SqFt: 2414, Status: Active, Property Type: Residential
2130 PALMETTO ROADMOUNT DORAFL32757
Save PropertyPhoto of 2130 PALMETTO ROAD, MOUNT DORA, FL 32757
2130 PALMETTO ROAD

MOUNT DORA, FL 32757

$259,000

Beds: 3, Baths: 2, SqFt: 1501, Status: Active, Property Type: Residential
645 OAK DRIVETAVARESFL32778
Save PropertyPhoto of 645 OAK DRIVE, TAVARES, FL 32778
645 OAK DRIVE

TAVARES, FL 32778

$220,000

Beds: 3, Baths: 2, SqFt: 1053, Status: Active, Property Type: Residential
979 DAVID WALKER DRIVE #E-6TAVARESFL32778
Save PropertyPhoto of 979 DAVID WALKER DRIVE #E-6, TAVARES, FL 32778
979 DAVID WALKER DRIVE #E-6

TAVARES, FL 32778

$225,000

Beds: 2, Baths: 2, SqFt: 1057, Status: Active, Property Type: Residential
10300 PEBBLESTONE COURTLEESBURGFL34788
Save PropertyPhoto of 10300 PEBBLESTONE COURT, LEESBURG, FL 34788
10300 PEBBLESTONE COURT

LEESBURG, FL 34788

$259,500

Beds: 3, Baths: 2, SqFt: 1456, Status: Active, Property Type: Residential
104 FLAME VINE WAYGROVELANDFL34736
Save PropertyPhoto of 104 FLAME VINE WAY, GROVELAND, FL 34736
104 FLAME VINE WAY

GROVELAND, FL 34736

$264,900

Beds: 2, Baths: 2, SqFt: 1556, Status: Active, Property Type: Residential
2108 VINE STREETLEESBURGFL34748
Save PropertyPhoto of 2108 VINE STREET, LEESBURG, FL 34748
2108 VINE STREET

LEESBURG, FL 34748

$169,900

Beds: 2, Baths: 1, SqFt: 1079, Status: Active, Property Type: Residential
40014 OAKRIDGE DRIVELADY LAKEFL32159
Save PropertyPhoto of 40014 OAKRIDGE DRIVE, LADY LAKE, FL 32159
40014 OAKRIDGE DRIVE

LADY LAKE, FL 32159

$205,000

Beds: 3, Baths: 1, SqFt: 1062, Status: Active, Property Type: Residential
210 E DESOTO STREET #2CLERMONTFL34711
Save PropertyPhoto of 210 E DESOTO STREET #2, CLERMONT, FL 34711
210 E DESOTO STREET #2

CLERMONT, FL 34711

$189,000

Beds: 2, Baths: 2, SqFt: 1242, Status: Active, Property Type: Residential
348 1ST AVEGROVELANDFL34736
Save PropertyPhoto of 348 1ST AVE, GROVELAND, FL 34736
348 1ST AVE

GROVELAND, FL 34736

$210,000

Beds: 4, Baths: 2, SqFt: 2091, Status: Active, Property Type: Residential
1136 S GRAND HIGHWAYCLERMONTFL34711
Save PropertyPhoto of 1136 S GRAND HIGHWAY, CLERMONT, FL 34711
1136 S GRAND HIGHWAY

CLERMONT, FL 34711

$179,900

Beds: 2, Baths: 1, SqFt: 1037, Status: Active, Property Type: Residential
1706 CENTER STREETLEESBURGFL34748
Save PropertyPhoto of 1706 CENTER STREET, LEESBURG, FL 34748
1706 CENTER STREET

LEESBURG, FL 34748

$180,000

Beds: 3, Baths: 2, SqFt: 1152, Status: Active, Property Type: Residential