Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?
Article first published online: 11 JAN 2012
© 2012 American Real Estate and Urban Economics Association
Real Estate Economics
Volume 40, Issue 2, pages 217–247, Summer 2012
How to Cite
Beracha, E. and Johnson, K. H. (2012), Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?. Real Estate Economics, 40: 217–247. doi: 10.1111/j.1540-6229.2011.00321.x
- Issue published online: 21 MAY 2012
- Article first published online: 11 JAN 2012
Homeownership is touted as the “American Dream.” It is credited with enhancing wealth; increasing civic pride; and improving self-esteem, crime prevention, child development and educational outcomes, among other benefits. This article does not dispute any of these claims. Instead, this study hypothesizes that crowding toward homeownership raises the price of homes above their fundamental value resulting in the purchase of a home becoming a contraindicative action. After setting the holding period to the average American's tenure in a residence, renting (not buying) proves to be the superior investment strategy over most of the study period.