Real Estate Economics, June 2012
Posted: 19 Apr 2011
Date Written: April 18, 2011
Home ownership is touted as the "American Dream". It is credited with enhancing wealth, increasing civic pride, improving self-esteem, crime prevention, child development, and better educational outcomes, among other benefits. This paper does not dispute any of these claims. Instead, this study hypothesizes that crowding toward homeownership raises the price of homes above their fundamental value resulting in the purchase of a home becoming a contraindicative action. After setting the holding period to the average American’s tenure in a residence, renting (not buying) proves to be the superior investment strategy over most of the study period.
Keywords: Homeownership, Renting, Buying, Rent-to-Price, Appreciation
Suggested Citation: Suggested Citation
Beracha, Eli and Johnson, Ken H., Lessons from Over 30 Years of Buy Versus Rent Decisions: Is the American Dream Always Wise? (April 18, 2011). Real Estate Economics, June 2012. Available at SSRN: https://ssrn.com/abstract=1814227