March 28, 2012
Should you rent or buy? That's the question researchers examined in a recent study sponsored by the REALTOR University Research Center. They looked at the wealth-building potential of owning vs. renting over an eight year holding period and found that today's "hurdle rate" tilts in favor of buying. The hurdle rate is the point between buying and renting at which it's a wash in terms of wealth-building. If today's hurdle rate is lower than the average past property appreciation rate for a particular market, then it makes sense to buy, because future property appreciation should enable an individual, on avreage, to create more wealth through owning than renting.