Homeownership Does Not Build Wealth Like Other Investments

Homeownership Does Not Build Wealth Like Other Investments

Homeownership Does Not Build Wealth Like Other Investments

$DIA, $SPY, $QQQ, $VXX

A home is a place to live, raise ad family and thrive, if it goes up in value it is a lucky extra

Homeownership is necessarily better than paying rent, according to a study Florida Atlantic University, Florida International University and the University of Wyoming.

“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,” Ken Johnson, a co-author of the report and an economist at FAU’s College of Business, said in a statement.

Renters who set aside money to invest in other assets beside a home can build more wealth, according to the research that examines home price appreciation against a portfolio of stocks and bonds that were equal in volatility.

Homeowners may lose the ability to deduct property taxes and a portion of the interest payments on mortgage debt, depending on whether Republican proposals to change the tax code are signed into law.

People who bought homes in expensive markets like the New York Metro area or San Francisco may see their tax bills rise if they cannot deduct mortgage interest from their gross income.

For many Americans who do not invest in stocks and bonds, the money they put into their homes is their most significant form of building wealth.

Homes lose value unless they are continually maintained and refurbished, and the land they sit on typically gets more expensive.

“The forced savings of a monthly mortgage is a Key reason why housing has served as an engine of growth for the middle class over the last 50 years,” an economist at brokerage Redfin, said in an interview Thursday.

“The American Dream is alive and well but in need of revision, To that end, we suggest not all but most should own rather than rent due to ownership’s embedded commitment to save. Owning real estate should be sold as a strategy to create better set of risk-adjusted returns rather than create wealth alone.”

Thursday, the US major stock market indexes finished at: DJIA +187.08 at 23458.36, NAS Comp +87.08 at 6793.30, S&P 500 +21.02 at 2585.64

Volume: Trade on the NYSE came in at: 776-M/shares exchanged

  • NAS Com[ +26.2% YTD
  • DJIA +18.7% YTD
  • S&P 500 +15.5% YTD
  • Russell 2000 +9.6% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Very Bullish (0.54) Bullish (0.42) Very Bullish (0.62) Very Bullish (0.58)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.45) Bullish (0.32) Very Bullish (0.52) Very Bullish (0.50)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Very Bullish (0.52) Very Bullish (0.50) Very Bullish (0.54) Very Bullish (0.53)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.26) Neutral (0.06) Very Bearish (-0.51) Bearish (-0.33)

Stay tuned…

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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