5 Sound Reasons to Buy a House- Per Harvard’s Recent Study

Harvard University’s Eric Belsky, who is the Managing Director of the Joint Center of Housing Studies at Harvard University and also serves on the editorial board of the Journal of Housing Research and Housing Policy Debate, shared a paper on home ownership last year. It is entitled - The Dream Lives On: the Future of Homeownership in America and within it he explores five financial reasons he thinks people should keep in mind when shopping for a home.

His five reasons are listed below, as well as a corresponding excerpt from his study:

1.) Typically housing is the main advantaged and available asset.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, home ownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) Whether you own or rent, you’re paying for housing.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Savings typically happens naturally through owning.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) You can benefit when it comes to taxes through owning.

“Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Buying a home now protects you from price increases in the market.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

At the end of the day there are numerous reasons why owning a home is a great benefit, one of which is the financial gains associated with it.

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