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Home owner ship unlikely to be overtaken by renting in the US, study finds

An analysis over a 31 year period across 23 metropolitan areas compared the ownership benefits in terms of appreciation and interest deductibility and the costs home owners incur with down payment, taxes, insurance and maintenance.
When it was assumed that renters reinvested any savings in rent, versus a higher monthly mortgage payment, maintenance and down payment, renters had a greater portfolio than buyers in 91% of the areas examined.

However, when the model allowed renters to spend any savings rather than reinvest those savings, 84% of buyers came out ahead.

‘We knew that home owners, on average, accumulate more wealth than renters,’ said Ken Johnson, editor of the Journal of Housing Research at Florida International University, who conducted the analysis with Eli Beracha.
‘These findings indicate that homeownership is a self imposed savings plan. Not everyone should own a home, but from a financial perspective, people who are planning to stay in a property over the long term can benefit from buying,’ he added.

Another analysis conducted by Johnson and Beracha, found that housing affordability is at record levels. Some 23 states are at 30 year record levels of affordability based on price to income ratios, and all 50 states are at 30 year record affordability levels based on mortgage payment to income ratios.

‘Home ownership is more affordable today than at anytime over the last 30 years,’ said Johnson.
Beyond the financial advantages of home ownership, Johnson also cited several studies that have demonstrated how home ownership enhances civic pride, improves voter turnout, increases personal happiness, reduces crime, and provides a better familial environment.

‘These findings are no surprise to realtors. We, like the nation’s 75 million home owners and many other who aspire to one day own a home, know home ownership is an investment in the future of our families, communities, and nation,’ said National Association of Realtors president Ron Phipps.

‘That is why we will continue to fight for public policies that promote responsible, sustainable home ownership. We believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream,’ he added.