Lawrence F. Flick, Chairman & Chief Executive Officer of Berkshire Hathaway Fox & Roach HomeServices, commented on the New York Times article, “Homeownership and Wealth Creation.”
“We’ve been hearing a lot that an increasing number of people are choosing to rent rather than buy a home. The recession of the last decade certainly contributed to this. So I am often asked if homeownership is still the best option for the next generation. It will come as no surprise that an important part of my answer is that homeownership has been, and will continue to be, the best long-term financial investment.
I’m supported by a recent article in the New York Times, “Homeownership and Wealth Creation.” The article argues that the net worth of homeowners over time has significantly outpaced renters, and that even with the decline in values that followed the housing bust, renters tend to accumulate little, if any wealth.
Why? Because homeowners save more. First, they save in order to make a down payment on their home. Second, they continue to pay down a portion of the mortgage with each payment. For renters to gain comparable wealth, they would need to invest a similar down payment and the savings accumulated by renting.
The article concludes that renting can make sense as a lifestyle choice or because of income constraints. As a means to building wealth, however, there is no practical substitute for homeownership.”
For additional information about renting vs. buying, contact Damon today.