Commentary: 'The Dream Lives On: the Future of Homeownership in America'

Recently Keeping Current Matters reemerged a paper on homeownership by Managing Director of the Joint Center of Housing Studies at Harvard University, Eric Belsky. The paper entitled 'The Dream Lives On: the Future of Homeownership in America,' five financial reasons as to why people should consider owning a house were presented. Here are the five reasons and our break down as to why the five reasons are accurate:

1)      Housing is typically the one leveraged investment available. With fewer lenders willing to lend out money and fewer people interested in borrowing money to buy stock and bonds, homeownership becomes the one leveraged investment available. As home values increase so does the home's return on equity, and right now home values are increasing.

2)      You're paying for housing whether you own or rent. When paying for rent payments go towards the landlord's principle, while homeowners pay debt service to pay down their own principle. In other words, there is a return on investment when owning a home, while there isn't when renting. Landlords are the ones making an investment in rentals.

3)      Owning is usually a form of "forced savings." Whether you realize it or not, owning a home is a way money. This is very beneficial to people that have trouble saving money. The study states that people have to make a housing payment no matter what, and owning a home can help people overcome deferring saving to another day.

4)      There are substantial tax benefits to owning. Homeowners can deduct mortgage interest and property taxes from income, and capital gains are excluded from income if homes are sold for a gain.

5)      Owning is a hedge against inflation. Housing and rental costs are bound to increase to a level higher than the rate of inflation. There have been numerous periods where the housing and rental costs have gone at or higher than the rate of inflation, therefore owning is a home is becoming a bigger advantage nowadays.

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