The Financial Benefits of Homebuying and Renting

November 17, 2017
Apartment building
Photo: Pexels

A new study concludes that renting could build more wealth than homeownership when renters invest money not allocated for rent, rather than spend it on goods and services. 

"On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds," wrote study co-author Ken Johnson of Florida Atlantic University's College of Business, in a release, per CNBC.

As long as home values don't fall, which has historically been the case in most markets, with the glaring exception of the last recession, homeowners are building a nest egg. They had also been getting a tax advantage. That is now at risk in the Republican tax plan, which curbs the mortgage deduction and in the Senate version, wipes out the property tax deduction.

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