Ask anyone about the American Dream and home ownership will most likely be at the center of it. Owning a home has been seen as one of the best ways to build wealth and plan for the future, but after the housing bubble popped in 2008 and the economy began to plunge, many are wondering if owning a home is still worth it.
As a part of their weekly Hustlin’ series, GOOD magazine recently took a look at the pros and cons of renting vs. owning a home.
Although most would argue that owning a home is the best option, the numbers don’t always bear this out.
Mark Bergen of GOOD writes:
The housing crisis starkly revealed that homes aren’t the guaranteed wealth creators they were advertised to be. Yet it’s not clear that, even in good times, they ever were.
A recent study tracked thirty years of data, creating a sort of advanced calculator to determine if buying or renting pays off more. The verdict? Renting almost always ekes out on top. Richard Arzaga, a personal finance professor at U.C. Berkeley, combed through hundreds of properties and came to a similar conclusion. “It’s the American dream to own a home, but whoever said that didn’t do the analysis on it,” he told Reuters. “100 percent of the time it was better to rent, rather than own.”
How could it possibly be better to rent, you wonder?
In the long run, renters spend less money on housing costs because they don’t have to buy and replace appliances, maintain the structure, and can move easily to lower their housing costs. If renters invested the extra savings, they could possibly build more value than that found in a home that is subject to the market.
Despite the numbers, Americans still have a soft spot for home ownership. But should we?
What do you think…when it comes to housing, would you rather rent or own?