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Using NAR Research to Address Prospective Buyer Concerns “Why Not Rent? I Can’t Afford to Buy!”

Some people who should not buy a house:  for example, anyone who is planning to move in a few years.  People with overextended credit are also probably not good candidates for homeownership.  However, home ownership—instead of renting–appears to be a good idea for many people—particularly at a time of rising rents.

The graph from a presentation by NAR Chief Economist Dr. Lawrence Yun shows that families with homeownership have a much higher net worth than is the case for renters.  Growth in mortgage equity and longer term price appreciation are the major assets for the middle class.  The homeowner with a 30 year mortgage payment has a paid-off home after  30 years; the renter has a nice stack of 360 rental receipts.

And, of course, there are many lifestyle/social benefits that homeownership creates for families—better educational achievement by children, better neighborhoods, increased community involvement, among others.

These are good answers to the question of “Why not rent?”

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Jed Smith, Managing Director, Quantitative Research

Jed Smith is Managing Director, Quantitative Research with the National Association of Realtors®. He has worked on real estate issues for the past 20 years, providing input on a variety of housing, commercial real estate, tax, and planning issues. Recently he has been involved in several international studies.

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