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5 Powerful Reasons to Own Instead of Rent

5 Powerful Reasons to Own Instead of Rent | Simplifying The Market

Owning a home has great financial benefits.

In a recent research paper, Homeownership and the American Dream, Laurie S. Goodman and Christopher Mayer of the Urban Land Institute explained:

“Homeownership appears to help borrowers accumulate housing and nonhousing wealth in a variety of ways, with tax advantages, greater financial flexibility due to secured borrowing, built-in ‘default’ savings with mortgage amortization and nominally fixed payments, and the potential to lower home maintenance costs through sweat equity.”

Let’s breakdown 5 major financial benefits of homeownership:

1. Housing is typically the one leveraged investment available

Homeownership allows households to amplify any appreciation on the value of their homes 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.

Example: Let’s assume you purchased a $300,000 home and put down $60,000 (20%). If the house appreciates by $30,000, that is only a 10% increase in value but a 50% increase in equity.

2. You’re paying for housing whether you own or rent

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are baked into the rent payment already – along with a profit margin!!

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. As a matter of fact, it was recently estimated that a family buying an average priced home this past January could build more than $42,000 in family wealth over the next five years.

4. Owning is a hedge against inflation

House values and rents tend to go up at or higher than the rate of inflation. When you own, your home’s value will protect you from that inflation.

5. There are still substantial tax benefits to owning

We know that the new tax reform bill puts limits on some deductions on certain homes. However, in the research paper referenced above, the authors explain:

“…the mortgage interest deduction is not the main source of these gains; even if it were removed, homeowners would continue to benefit from a lack of taxation of imputed rent and capital gains.”

Bottom Line

From a financial standpoint, owning a home has always been and will always be better than renting.

Posted in:

  • Home Buying,
  • Home Renting

Post Tags:

  • home buying,
  • own,
  • Real Estate,
  • rent,
  • rent vs buy
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Tim Walsh, Ayda Walsh, Kaylee Walsh, Jeff Walsh and Sean Paulson are all independent, licensed real estate agents working together. They are all licensed in VA. As of Jan 1st, agents are limited to advertising as a TEAM unless they have a business entity/licensed under a TEAM. We are independent agents working together but not under a TEAM Business.

Some of the data relating to real estate for sale on this web site may come from MRIS or from the owners of the property. Other Listings or additional information may come from various different websites or brokers who participate in the MRIS, MRIS Products or with ACE Video & Marketing. Properties listed with brokerage firms other than Kaylee Walsh with SAMSON Properties are marked with the MRIS Logo and detailed information about them includes the name of the listing brokers. The properties displayed may not be all the properties available. All information provided is deemed reliable but is not guaranteed and should be independently verified. We respect agent relationships. If you are already working with an agent, this is not intended to be a solicitation. Kaylee Walsh is licensed in the state of Virginia.

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