Should you RENT OR BUY a home? That’s the question on everyone’s mind these days.
And the question isn’t always an easy one to answer – all sorts of variables come into play that make that decision different for each homebuyer. But sometimes it comes down to the answer to this one question:
WILL YOU CREATE WEALTH FASTER IF YOU BUY A HOME TO BUILD EQUITY *or* SHOULD YOU RENT, AND REINVEST THE MONEY YOU WOULD HAVE SPENT ON TAXES, INSURANCE, AND MAINTENANCE?
Luckily, somebody’s already done that work for you.
According to the BERACHA, HARDIN & JOHNSON BUY vs RENT REPORT, you can see visually where the value is on the RENT vs BUY comparison.
And they don’t do the short work on that report – their graphs chart the decision for you all the way back to 1982.
The key takeaway: for the most part, it’s been more beneficial in the long run to own a home. And it also depends on what part of the country you live in.
Generally speaking, there was a brief spike between about 1999 and 2010 where renting would have put you in better financial shape. As of this writing, it looks like a small spike back into renting as the better choice is coming back into play – it will be interesting to see where this goes over the next 10 years. Unless you live in New York — there, it’s still worthwhile to own right now.
See the RENT vs BUY report here: https://business.fau.edu/departments/finance/real-estate-initiative/bhj-buy-vs-rent-index/bhj-data-and-graphs/