Owning is still better than renting! Here’s why:
1. Housing is typically the one leveraged investment available
Owning a home allows you to amplify appreciation on the value of your home 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, and so on.
2. You’re paying for housing whether you own or rent
Some people believe that renting eliminates the cost of taxes and repairs. BUT…you’re still paying these but the landlord is passing those expenses to you in your rent. Therefore, you forgo earning your own equity and potential profit from a sale. The bottom line is, you’re paying someone’s mortgage – it might as well be your own!
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.
4. Owning is a protection against inflation
House values and rents usually go up at or higher than the rate of inflation. When you own, your home’s value can protect you from that inflation.
5. There are still substantial tax benefits to owning
The new tax reform bill puts some limits on deductions on certain homes. However, there is still the benefit of lack of taxation on imputed rent and capital gains.
Owning a home offers so many benefits over renting. It’s always advantageous to pay your own mortgage and earn equity than pay someone else’s bills. From a financial standpoint, owning a home has always been and will always be better than renting.