Homeownership – A Good Way of Producing Wealth

According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index homeownership is a better way to produce greater wealth, on average, than renting.

Is it better to rent or buy a home in today’s housing market?

The index examines the US housing market and then isolates 23 major markets for comparison. The researchers use a “‘horse race’ comparison between an individual buying a home and an individual renting a similar quality home who 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.“

Real Estate Bottom Line

Buying a home makes sense financially. Rents are projected to increase substantially in the next year.  Lock in your housing cost with a mortgage payment now.