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

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

The BH&J Index is a quarterly report that attempts to answer the question:

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

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.”

Dallas, Denver and Houston currently remain deep in rent territory but, “there is some degree of good news from these markets for homeowners as the cost of renting is now increasing at a faster rate than the cost of homeownership — reducing the advantage of renting over buying.” 

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.

 

*Courtesy of http://www.keepingcurrentmatters.com/2016/03/08

Sherif Nathoo

Sherif Nathoo

Sales Representative
CENTURY 21 Leading Edge Realty Inc., Brokerage*
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