Even in today's dismal residential market, owning a home might be the smart financial move

It’s easy to forget that there actually are some nice things about owning a house.

ron phipps.jpg

Ron Phipps

This came up while I was interviewing Ron Phipps, the current president of the National Association of REALTORS. We spoke a lot about falling home values — the median sales price of a home, $156,100, fell to its lowest point in nine years in February, and homes on average have lost $26,800 worth of value from June of last year to February of this — and about the still staggering number of housing foreclosures glutting the market.

But then Phipps mentioned some data compiled by the national association. Turns out, even with home values falling, families that own homes tend to be better off financially than are those who rent.

Here are the numbers that Phipps shared with me: About 75 million families in the United States own homes, anda bout 46 million of these families have mortgages on these residences. The average net worth of these families stands at $188,000.

The average net worth for families that rent stands at just $4,600.

Of course, this is just one way to look at the economic impact of owning a house. There are plenty of families who have purchased homes that are far more expensive than they can afford. They’re the ones facing foreclosure today. And they certainly aren’t better off financially than are the those families who made the economic choice to rent.

But it’s hard to argue with those net worth numbers. Even in a terrible time for the housing market, owning a home seems to be a smart financial choice for those families that don’t spend more than they can afford.


Leave a comment
  • fb_avatar

    It may just be the smart financial move at the time. But as an investment a home can consume alot of cash if it is not a new house. Things break down and sometimes you may need your water heater fixed or your Central Heater Repaired in Santa Monica. No matter the case owning a home is usually not a smart financial move if you calculate all the interest and expenses you put in to it. It is more of a liability if you do your numbers right. Calculate your taxes and interest over time and chances are you will either break even or take a loss. You may see more money when you sell the property than it was worth when you bought it but crunch your numbers and you shall see that unless you are flipping the property for a quick profit holding on to a home for a while is a liability.

Leave a comment