I had to laugh at your 'except your own' (link reference), Nathan! LOL

As for the article - that is not true as a whole in our area. Our rental rates are so incredibly high, it's crazy to think of spending that much income paying off someone else's mortgage! However, there are pockets where that is a statement that I would agree with. 

For me, I love owning investment property and having someone else paying off my mortgage, little by little, month by month!!

Nathan,

Personally, I find this is a generalization, and each market differs and each portfolio of investment differs.  Real estate can build wealth, but it is not the only way to do it....A

Well, as with any investment there are many variables. But, we bought a home (lived in it for 8 years), bought another home, (lived in it for 3 years), kept that other one as a rental, bought another rental, bought another home (3rd one we purchased to live in), sold the whole lot of them (3) except for our current home and paid off our mortgage on our new home. So now we are 38 years old, debt free and able to invest our money in all kinds of different things because of homeownership. Wouldn't have been where we are now if we had rented. So, I'd say I disagree. But, there will be exceptions depending upon circumstances. -Kasey

My thinking is different on this, I look at any investment real estate outside of personal homes as investments. Also there is a "time value" of money consideration, at least for me, it's the reason why I'm fine with paying an outrageous rental amount for a home in a great neighborhood that would have a higher carry cost (with the understanding of alternative investments & taxation) if I had owned outright. Personal residence to me is a "lifestyle expense", yes I know I'm in the minority in this way of thinking, and yes, I do very much believe in investing as I have for most of my life, traded equities before I was 18.

The ones with the proper MINDSET & KNOWLEDGE...build the real wealth.

Invest it where?
Certain investments may prove that statement true.
And yes, I read it.

I saw that headline, but did not bother to read it.

I saw this & was going to post it also. Very strange. I have to read it again to see if it financially makes sense. 

It might make sense if people have the integrity to put the money in the bank/account to reinvest.  You only have to beat 4-5% in my area.

Arguments can be made both ways, depending on the local market.  The BIG truth is, very few people have the discipline to actually invest the money they (theoretically) save by renting.  

For me, it's more of a lifestyle choice.  I hated apartment life and bought my first home when I turned 21.  I love owning my home free and clear (for the last 22 years).  Yes, I pay taxes and insurance but those expenses would barely pay for a hovel in just about any city or town in the U.S.  

I had a call from an East Indian guru and he is not alone. It is often cheaper to rent than owning esp in high tax or high priced homes. I was in Union City, CA- a not the best neighborhood town. KB starts its new home at $1.65M there. I asked what happened to the 1 story 1900 sf?  Well, we sold few about 2 yr ago. They did not make much profit and now we work on larger plateform 1.65M to $1.89M and in 2018 we anticipate to raise the asking price. What? You are in a 5 rating school neighborhood for KB homes?  OMG. Outside the development, existing homes were $375K just a few years ago.

it depends on a lot of things...

The problem is in my area it is less expensive to buy than rent so a renter wouldn't have anything extra to invest. With that said, buying is a good investment especially in our market the last 3-5 years with good appreciation.

It has for us both in our personal homes and in our investments.

It depends.

Yes, it really does.   The person.   The area.  Timing.

There are other strategies that work.  

Totally disagree on THREE Fronts

1. Real Estate ownership is a FORCED Savings program . You have no choice but to build Net Worth

2. Appreciation is calculated on the entire value not just your equity position . Additionally it is usually 2%+ better than savings interest offered by banks

3. Finally without the TAX SAVINGS/SHELTER provided by real estate you will pay more taxes, striping away the money you claim renters might save ! And therefore have VERY limited funds to invest !

I disagree. Look at the cost of renting these days, it's like a mortgage payment (if not more). that includes taxes and insurance. And let's not forget that many renters rent because they can't qualify for a mortgage... where would they get the extra funds to to save? Has anyone looked at what savings accounts pay in any event... I could go on and on.

How about pride of ownership? I lived in many rentals myself, but I absolutely disliked all of them.

not true in my market.  Rentals are expensive. And interest is crap.

I love links. Bring 'em on.

NEVER let curmudgeons control what you do!

Be aware, unlike the curmudgeons, I am fully in control of whether I do or do not click and find no offense at their presence.

NAR's very own trends report reveals owning residential real estate is statistically not a wealth builder at this time. Look at purchase price/sold price alongside duration of ownership and clearly the'wealth building' concept is hard to defend..

I'm not typically disagree-able but in this case I must disagree. 

On Kauai our rental market is extremely tight and buyers often save substantially over what they would pay in rent even with very low down payments. 

I strongly disagree, especially in our area.  They do not take into account appreciation or down payments.

Unless you've invested only in stocks that have gone through the roof, I don't see HOW you could out pace real property.  With my principal house as an example, I have over 700k in equity in it.  I bought it for 400k and it's worth $1m or slightly over now.  Show me any stock out there where I can put down $40k (I did 10% down) and still have 100% of the appreciation and equity.

Same with rentals.  The ones I own have more than doubled in value since I bought them.  Yes I have to sell them to realize that money, but that's no different than stocks.  Bonus for me is, I'm only putting up a fraction of the money, where as stocks you have to put up the full amount.

After owning several investment homes and seeing eachof them rise over $100K over time, while also getting positive cash flow each month, I struggle to accept this- over the long term.

Granted, there are other ways to invest and make money too, so this is not the only nor the best possible way.  Property investment does take time, energy, stress etc that maybe stocks do not.  However, My property value does not go down due to a war in another country, either. and its insured... my stocks are not.

Any plan is subject to acts of God and man. Real Estate performs consistently

I think if you can afford to buy it's better to buy but then everyone's situation is subjective. 

In many ways it's true. The wealth building in real estate only works if you buy low and the market enters a bubble, then you sell. Otherwise, if you do the numbers correctly, rentals frequently make more sense, but there are many assumptions involved (e.g. you won't lose your principal when you invest).

I do not believe it. It was the foundation from which I built mine.

Agree that home ownership does not build wealth in in many cases, but it does build wealth in other cases. Disagree that renters save and invest to put themselves in a better financial position. Some do, but from what I've seen, most don't or just can't.

Agree

Interesting question and great answers.

Thank you.

I think it can be a way to build wealth much like a lot of other things.  Historically, it is the greatest builder of wealth.  

I do not.

it builds alot of wealth in my area.....

In the mortgage business we say "What is your home worth"? Answer...nothing until you sell it! With the possibility of losing the tax deductions for mortgage taxes and interest, many financial shows are saying it may be better to rent. I hope the NAR has a good lobby, for this could really impact our industries......

Disagree.

Every situation and investment portfolio is unique as are the tax advantages to individuals and corporations. In general I agree that "home ownership" does not build wealth. Too many homeowners use the home as an ATM. Too many spend the equity built. When the market turns ... they are screwed ... we've seen that cycle many times. 

Strategic investing in property can add to ones investment portfolio. I draw a line between "home ownership" and "investment property".  

Nathan Gesner I don't think so, but how many renters will save the money?

The typical person can do better in real estate because they lack the time or knowledge to invest in the other markets!

Fake news

No!

Rents are high in the Denver market, why waste money on rent.

Investing in a home in Denver will give you a great return right now.  We are seeing 10% or more in many areas.   

As a general rule and over the long run, no this doesn't make sense to me, especially because rent usually factors in taxes, insurance, maintenance costs.  Over the long run, home prices should go up, so it would increase the equity...and rent would also increase while mortgage payments remain flat. Over the short term, it doesn't always work out that way.

Think it's market dependent, and also very local.  Overall, home prices go up over time, but so do stocks or any other worthwhile long term investment.

I've always thought of homes as more of a tax shelter than an investment in a traditional sense.  If the recent tax proposals pass, that viewpoint will become moot.

Homes are a way to build wealth, and so are other investments.  Just a different way of doing things.  

What that article likely doesn't say (didn't click) is how convenient it is to own VS rent.

Depends

Here is the think, many renters can barely afford the rent every month never mnd have extra money to invest. Those who buy a home, take care of it and do not use it as a ATM sucking off its equity in frequent refinaces, build wealth. Period