A Revision of the American Dream of Homeownership Article

Beracha, E, Skiba, A, Johnson, KH. (2017). A Revision of the American Dream of Homeownership . 26(1), 1-25. 10.1080/10835547.2017.12092125

cited authors

  • Beracha, E; Skiba, A; Johnson, KH

authors

abstract

  • It is well accepted that homeowners, on average, have greater total wealth than renters. However, Beracha and Johnson (2012) show that in a strict “horserace” comparison, renting creates higher wealth than ownership in the majority of cases. In this paper, we revisit Beracha and Johnson's buy versus rent model to investigate factors affecting the wealth outcomes of the buy versus rent decision. Three key findings emerge: (1) the difference in wealth between renting and owning can be most affected by choices within the scope of the individual rather than through the impact of exogenous market variables; (2) households that fail to reinvest buy-rent cash flow differentials accumulate less wealth; and (3) property appreciation plays only a minor role in the results.

publication date

  • January 1, 2017

Digital Object Identifier (DOI)

start page

  • 1

end page

  • 25

volume

  • 26

issue

  • 1