Harvard: 5 Financial Reasons to Buy a Home

Real Estate Agent with Smart Way America Realty AB067859

Harvard: 5 Financial Reasons to Buy a Home

Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. This year he released a new paper on homeownership - The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons people should consider buying a home.

Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for many social and family reasons. It also makes sense financially.

Posted by

Your Trusted Pro in the Poconos, Professional Results You Expect 

Kris Collis, Associate Broker

Smart Way America Realty

East Stroudsburg, PA 18301

Client Endorsements



Comments (4)

Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Great post it reminded me 50+ years ago when my father read an MIT report about interest rates climbing got him off the fence and bought a house hopefully this Harvard Report will get the fence sitters to notice:)Endre

Jan 23, 2022 10:54 PM
Kris Collis, Associate Broker

Endre Barath, Jr. Like father like son.  The apple did not fall far from the tree :))

Jan 28, 2022 07:15 PM
M.C. Dwyer
Melody Russell Team at eXp Realty of California, Inc. - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

Thanks for posting this - I hadn't seen the Harvard paper before.     I believe in home ownership because I saw my parents comfortable in their retirement with no mortgage, while older friends of mine struggled to pay rent which always goes up.    Reblogging - thank you Kris Collis, Associate Broker !

Jan 26, 2022 07:56 AM
Kris Collis, Associate Broker

And thank you, M.C. Dwyer for the reblog also!  As Endre commented, the Harvard report might just reach some fence sitters.

Jan 28, 2022 07:17 PM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

This is a great post and is valuable to everyone -- buying or renting.  I believe the point that opens the eyes of many renters is:

2.) You're paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”


Jan 26, 2022 11:27 AM
Kris Collis, Associate Broker

So true, Diana Dahlberg.  Glad you emphasized this point, renters who decide to pay down their mortgage and not the landord seldom look back.

Jan 28, 2022 07:19 PM
Patricia Feager, MBA, CRS, GRI,MRP
Selling Homes Changing Lives

Kris Collis, Associate Broker - This is an excellent blog post packed with valuable information! Thank you for sharing!!!

Jan 28, 2022 11:09 PM