The Value of Homeownership

Recent data from Case-Shiller show that the long-run return on homeownership is low, and while some say consumers would be better off investing in equities, one expert says that conclusion is "wrongheaded" in a variety of ways.

For one thing, homeownership is a way for consumers to accrue wealth for retirement, particularly as wage growth has been stagnant for decades, MarketWatch reports. As well, owning a house is an important economic reserve in case of high medical and health insurance costs, and for those who need long-term in-home care. Bequeathing a property in a family is also a way to transfer wealth in the middle class.

Instead of talking people out of buying houses, we should be very concerned that Millennials, who were hit with student loans and a terrible job market as they got out of school, are not buying houses. They have essentially been forced to substitute student loan debt for mortgage debt.

All that said, an argument could be made that Americans overinvest in housing. The average square footage of new single family housing has been rising sharply, even as the number of people in the average household has declined.

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