A New Report Challenges the Notion of Home Ownership as a Vehicle to Build Wealth
Digested from CNBC
Owning a home may no longer be the best way to build wealth, reports CNBC's Diana Olick.
Citing an index from Florida Atlantic University (FAU), Olick writes that increases in mortgage rates and home prices are pushing the rent-buy equation towards rent. The index factors in home prices, rents, mortgage rates and alternative investments that create wealth.
The FAU index measures 23 cities. Eleven of those cities, including Chicago, Cincinnati and Cleveland are still on the buy side. In nine cities, including Atlanta and Minneapolis, it is a toss-up as to whether renting or buying is better right now. In three cities, Dallas, Denver and Houston, renting is the better option for building wealth.
“Despite different levels currently, all of the cities are steadily moving toward rent in the FAU index, because home prices have risen so steeply in the past few years and continue to gain,” Olick writes. “Mortgage rates bumped higher after the presidential election in November, and although they have fallen since, they are expected to rise through the end of 2017.”
Backing the FAU index is the most recent Fannie Mae survey, which “found those who said now is a good time to buy a home fell to its lowest level ever,” Olick reported.