Owning
a home may help you save money, but it was not help you make money.
Householdsare better off taking control of their finances than relying on fluctuating
home values. That is the finding of a new.
"On
average, renting and reinvesting wins in terms of wealth creation regardless of
property appreciation, because property appreciation is highly correlated with
gains in the traditional financial asset classes of stocks and bonds,".
The noteworthy housing crash at the
end of the last decade came as a bitter shock to millions, large number of whom
never considered that home estimations could fall at all or that they could
fall as far as they did.
Home ownership rate is still hovering near its record
low, yet buyer demand has been steadily rising. Real estate, however, has not
been rising quickly enough to meet that requirements, resulting in fast-rising
prices. In the last few years, prices have increased faster than income.
In
some markets, home values have hit record highs, again fuelling the debate over
which is more lucrative, buying or renting?
Tenants
have also increased dramatically, as new households are formed and millennials,
now the largest generation, struggle to afford a down payment.
While there has been a building boom in luxury
rental housing that has not been the situation with moderate rental advancement.
That is because it expect that the extra money a tenant
saves by not owning a home and not saving for a down payment is simply spent on
products or services, benefits and not contributes.
"Obviously,
many tenants won’t reinvest those monies and will instead utilize them for buyer
products, which is the minimum desirable option in terms of building riches.
"In other words, the rent argument only works
if the renter invests the rental investment funds as opposed to devouring it.”
To have a fair race, that reinvestment into stocks
and securities must be as risky as that specific housing market”
While
all housing has always been local, neighborhood, home price performance has
been especially so following the retreat.
Three of those four were in Northern California, and
the fourth was Miami. All four rank high among real estate investors,
especially foreign investors, not owner occupants.
Nationally,
since the recession, there have been two distinct housing markets.
"Prices
aren't growing quickly in these places and there's been little home equity
growth. The housing market mirrors the growing economic inequality in the
country at large: Rich metros grow, poor ones don't."
When
you consider that many people are not invested in the stock market, "the
forced savings of a monthly mortgage is a key reason why housing has served as
an engine of growth for the middle class over the last 50 years"
As
long as home values does not fall, which has historically been the case in markets,
with the glaring exception of the last recession, homeowners are building a
nest egg. They had also been getting a tax advantage. That is now at risk in
the Republican tax plan, which curbs the mortgage deduction and in the Senate
version, wipes out the property tax deduction.
Real
estate can still be a good investment, but not necessarily living in the home
you own. Being a landlord or investing into real estate-related stocks and
commodities can be more lucrative that keeping all your capital in the home.
