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Homeownership doesn't build wealth, study finds

15 points by kimsk112 9y ago

chmaynard 9y ago
This is a classic example of the pseudo-journalism that dominates our mainstream mass media. The only real news in this article is that a study took place and came to some conclusions. Missing are details such as the study methodology, a citation, peer-review status of the study, hidden assumptions and biases, qualifications of the researchers, and so on.
hactually 9y ago
Source: http://aresjournals.org/toc/jhor/26/1?code=ares-site http://aresjournals.org/toc/jhor/26/1?code=ares-site A more citation ready article is here http://www.fau.edu/newsdesk/articles/homeowners-cant-count-on-property-appreciation-for-wealth.php http://www.fau.edu/newsdesk/articles/homeowners-cant-count-o... but overall owning and living in your own home isn't a vehicle for wealth.
- phnofive 9y ago
  Thanks for providing the source; this comment clarifies the headline: > “When you assume that those monies are reinvested at a rate of return, renting, on average, wins in terms of wealth creation,” Johnson said. “Of course, many renters will not reinvest those monies and will instead use them for consumer goods, which is the least desirable option in terms of building wealth.” Mythical, prudently invested renters may beat RE appreciation. You can’t sleep in a vanguard account, but I suppose you can’t buy bread with equity either.
phnofive 9y ago
The first line of the article runs contrary to the headline: > Owning a home may help you save money, but it won't help you make money. Even this point I disagree with. Is it not cheaper to own and maintain rather than rent, in the long term?
- mixmastamyk 9y ago
  Not in such a warped market.
voidmain 9y ago
A useful way of looking at this, orthogonal to the issue of forced savings, is that you need a roof over your head, so you are born short housing. Buying a modest home covers this short and so is typically a risk mitigating thing to do. Owning more house than you really need puts you long housing. Remaining short housing and investing in the stock market may have a positive expected return, but puts you at risk of being priced out of your local housing market if that happens to outperform stocks for a while.

15 points by kimsk112 9y ago

This is a classic example of the pseudo-journalism that dominates our mainstream mass media. The only real news in this article is that a study took place and came to some conclusions. Missing are details such as the study methodology, a citation, peer-review status of the study, hidden assumptions and biases, qualifications of the researchers, and so on.

hactually 9y ago

Source: http://aresjournals.org/toc/jhor/26/1?code=ares-site http://aresjournals.org/toc/jhor/26/1?code=ares-site A more citation ready article is here http://www.fau.edu/newsdesk/articles/homeowners-cant-count-on-property-appreciation-for-wealth.php http://www.fau.edu/newsdesk/articles/homeowners-cant-count-o... but overall owning and living in your own home isn't a vehicle for wealth.

phnofive 9y ago
Thanks for providing the source; this comment clarifies the headline: > “When you assume that those monies are reinvested at a rate of return, renting, on average, wins in terms of wealth creation,” Johnson said. “Of course, many renters will not reinvest those monies and will instead use them for consumer goods, which is the least desirable option in terms of building wealth.” Mythical, prudently invested renters may beat RE appreciation. You can’t sleep in a vanguard account, but I suppose you can’t buy bread with equity either.

phnofive 9y ago

The first line of the article runs contrary to the headline: > Owning a home may help you save money, but it won't help you make money. Even this point I disagree with. Is it not cheaper to own and maintain rather than rent, in the long term?

mixmastamyk 9y ago
Not in such a warped market.

voidmain 9y ago

A useful way of looking at this, orthogonal to the issue of forced savings, is that you need a roof over your head, so you are born short housing. Buying a modest home covers this short and so is typically a risk mitigating thing to do. Owning more house than you really need puts you long housing. Remaining short housing and investing in the stock market may have a positive expected return, but puts you at risk of being priced out of your local housing market if that happens to outperform stocks for a while.