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Buying a home not always the best option?

Wealth 'diversification is better'

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Contrary to popular opinion, one economist believes that renting a home could be better than buying, an article in MarketWatch by Maria Lamagna in states.

From the article

“Housing is overrated as a financial investment,” according to economist Alex Tabarrok, an economics professor at George Mason University and a research fellow at the university’s Mercatus Center, which conducts research on financial markets.

“First, it’s not good to have a significant share of your wealth locked into a single asset,” he wrote. “Diversification is better and it’s easier to diversify with stocks. Second, unless you are renting the basement, houses don’t pay dividends. Stocks do. You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market.”

Not everyone in the industry agrees with this. Zillow recently reported that it is more affordable to buy than rent, especially given low monthly mortgage payments and increasingly expensive rents.

While it can be more difficult for Millennials, Trulia still found that it is 23% cheaper for that younger generation to buy a home than rent nationally.

In addition, even in New York City, one of the hottest markets in America, data suggests that buying could pay for itself in less than five years, according to an article about New York City's housing market.  

Source: MarketWatch
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