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Real Estate

Owning Versus Renting

How does owning a house improve my net worth more than renting?

Owning a house may improve your net worth in more ways than if you are renting a home because, if you own a large appreciating capital asset, even if you borrowed a portion of the sale price to own it, you benefit from the appreciation of the house over time, even after factoring in inflation, interest payments, tax deductions, etc. The more expensive the house you can afford to purchase, the higher the amount of dollar equity you eventually get to use when computing your net worth. Simply put, a $100,000 home appreciating 10% generates $10,000 of equity, while a $500,000 home that appreciates 10% generates $50,000 in equity. When you rent, you have no investment and no appreciating asset.



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