The desire to own a home has been a fundamental aspiration among Americans in nearly every generation. But the logic of home ownership came into question as the Recession wreaked havoc on the economy and many homeowners found themselves in difficult situations.
Was it still a viable economic decision to buy a home? Or would renting be the better option?
Many experts feel that buying a home still makes the most sense. In a report titled “The Dream Lives On: the Future of Homeownership in America,” Managing Director of the Joint Center of Housing Studies at Harvard University Eric S. Belsky, offered 5 reasons why buying a home is still a solid economic investment:
1. It offers the sort of leveraged investment that isn’t available to many. “Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money,” writes Belsky. “As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor.”
2. People pay for housing, whether they buy or rent; those payments better serve homeowners. Homeowners build equity, while renters do not.
3. It forces people to save. Most people who aren’t good savers are diligent when paying their mortgage. ”Owning a home can overcome people’s tendency to defer savings to another day,” notes Belsky.
4. Homeowers reap tax benefits. Homeowners can deduct mortgage interest and property taxes from income. In addition, capital gains on home sales are excluded up to certain levels.
5.) It’s a hedge against inflation. Home values tend to rise in most time periods faster than the rate of inflation.
Beyond these reasons, one can’t discount the emotional element. “Americans yearn for homeownership,” writes Belsky, adding that people “esteem the control it gives them over their life…”