On March 20, 2024, we posted a blog “Homeownership Versus Renting”, which addressed the relative merits of owning versus renting. Traditionally, owning a home has been a way for US households to build wealth. In a low interest rate environment, many advisors believed that buying as much house as you could finance was a reasonable strategy.
Things change. New advice leans against stretching to buy a lot of house at current prices and interest rates, which may not be as advantageous as renting and investing surplus cash.
The financial aspects of home ownership are complex. In return for your investment you get shelter, but you also face significant and largely uncontrollable occupancy costs. A house is a money pit.
There is no “one size fits all” strategy when it comes to an appropriate balance between investing in a home versus alternatives. Investors are likely to benefit from reviewing their specific objectives with their advisor(s).
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
