Skip to main content

Can Renting Build More Wealth Than Homeownership?

Jun 06, 2018
A new study is challenging the long-held notion that renting is less financially viable than homeownership

A new study is challenging the long-held notion that renting is less financially viable than homeownership.
 
According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index report produced by Florida Atlantic University (FAU) and Florida International University (FIU), many renters who reinvest their money have an increasingly better chance at creating wealth than individuals who purchase a home. The BH&J Index tracked 23 metro areas, with many of them close to the peak of their current housing cycle.  in the BH&J Index, many are nearing the top of their current housing cycle, meaning they are above their long-term pricing trend. These markets include pricey metro areas such as Honolulu, Houston, Los Angeles, Portland, San Diego, San Francisco and Seattle. and St. Louis.
 
But this situation does not necessarily play out in metro areas below their long-term pricing trend, which means meaning buying and building equity is the superior option. This includes Boston, Chicago, Cincinnati, Cleveland, Detroit, Milwaukee, New York and Philadelphia.
 
"On the heels of information concerning slowing housing starts, rising mortgage rates, decreased demand and unsustainable price increases, these numbers provide additional evidence that housing markets around the country are slowing, resulting in many to opt for renting," said Ken Johnson, a real estate economist and one of the index's creators in FAU's College of Business.
 
"The current scores driving the markets in the direction of renting and reinvesting appear to be the results of higher mortgage rates, increase in returns, on average, in the stock market, and the cost of ownership, which includes your mortgage payment, taxes, insurance, maintenance, etc.," said Eli Beracha, Co-Creator of the index and associate professor in the Hollo School of Real Estate at FIU. "All of these costs are rising faster than the cost of renting a comparable property. Therefore, renters who take the money they're saving each month and reinvest it are going to build wealth faster than those who buy a home, on average."

 
About the author
Published
Jun 06, 2018
Mass Firings At CFPB Imminent, Filing Says

Unions representing CFPB employees said 95% of the Bureau's workforce could be cut by the weekend

Feb 14, 2025
Realty Fees On The Rebound

Real estate commissions are trending back up, post-NAR settlement.

Feb 13, 2025
Wire Fraud Losses Are Mounting

First-time homebuyers are especially at risk for wire fraud, report finds.

Feb 13, 2025
HUD Secretary Halts Equal Access Rule Enforcement

HUD to be transformed 'in His own image'

Feb 10, 2025
Rocket's All-American Return To The Super Bowl

The company spends millions to remind Americans of "the meaning of home."

Feb 10, 2025
Homebuilders Cheer Delay Of Trump Trade War

Canada and Mexico stave off tariffs on billions of dollars of materials crucial to the U.S. homebuilding industry

Feb 04, 2025