WSJ: Making a new case for home buying

Amy Hoak is a columnist at the Wall Street Journal and she just wrote an update article on the Rent Vs. Buy debate.  The article which was published in the Wall Street Journal on November 27, 2011.   Here is a link:

http://online.wsj.com/article/SB10001424052970204443404577054151834036634.html?mod=WSJ_PersonalFinance_PF14

In the article, Ms. Hoak has a “priceless” quote:

Historically, renting has been the better choice, according to recent research.

Renting was the better move about 75% of the time, according to “Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?” a paper scheduled for publication next year.

The catch: Renters need to invest all the money they save.

“We find that if people don’t invest the money, actually about 90% of the time, you’re better off buying,” says Eli Beracha of East Carolina University, who co-authored the paper with Ken H. Johnson of Florida International University.

That’s because for many Americans, their home has become a sort of forced savings account, allowing them to build savings through home equity.

In essence, since the marginal propensity to consume for most renters is at or near 100%, the decision to “keep renting” results in a less favorable outcome 90% of the time.

The article is a great read for anyone trying to decide if now is a good time to buy a home.

Scot Campbell is the President of The Scot Campbell TEAM at Coldwell Banker-Campbell Realtors in Huntington Beach, CA.  He has been a licensed broker for over 21 years and has brokered over 1000 homes and just about every type of transaction imaginable.  On his website you can search for homes and obtain an instant home value report: www.RealtyDigestOnline.com  He can be reached at 714-960-0700 at the office, 714-336-0394 on his mobile number or via email at Scot.Campbell@ColdwellBanker.com

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