Investing in real estate is expensive, and it can be tricky, but it is rarely a losing proposition.  And a recent survey by LendingTree.com provided some interesting feedback when asked whether respondents would prefer to purchase a home rather than rent.  What was curious to me was that only 41% stated that they would rather own than rent because of the unique way in which homeownership builds wealth over time.  (This uniqueness is as Mark Fleming, Chief Economist at First American Lending, puts it, “…a home is a truly one-of-a-kind asset.  It’s an asset that’s both an investment and a place to call your own…the major financial advantage of homeownership is the accumulation of equity in the form of house price appreciation….”)

When I say these responses were curious and interesting, it’s only because that 41% number seems low considering the opportunity to build wealth that comes with homeownership.    

The survey revealed many non-financial reasons why Americans would choose to purchase a home rather than rent, which do make some sense.  Three of the most common non-financial responses were;

• The flexibility to make a space your own
• The pride homeownership offers
• The sense of stability

And they do make sense because, as I read them, it takes me back to when Rebecca & I bought our first house.  Our primary motive for purchasing a home at that time wasn’t wealth-building.  We just needed more room for our family and we wanted to lock in the most significant piece of our monthly budget.  We wanted “stability.” 

I wanted a yard and a doggy door to accommodate that dog I was holding off on until I owned my own home.  And I didn’t want to have to ask permission from my landlord.  Homeownership gave me the “flexibility to make a space my own.” 

In the end, our new home came with a beautiful yard with grass that was hard to keep in Arizona. I wound up not wanting a dog out there trampling in down.  “pride of homeownership.”

So, at that time and as first-time homebuyers, we weren’t thinking about building wealth either.  All we wanted was enough room for our family, to make sure we knew that our monthly housing cost would stabilize, and to know if we wanted to paint a room, we only had to worry about the color.   

It seems when we bought our second home we still fit into the category of the 59% where building wealth through homeownership was more of a bonus than a motive.  When we moved to Ventura County back in 1997, we wanted to live at the beach. We were lucky to stumble into an exceptional deal on a home rental in the Pierpont Beach neighborhood of Ventura.  We were there for five years until the owners decided to sell, and after annual rent increases, we knew it was time to get back into homeownership.  Still, we weren’t thinking about building wealth through real estate.  We just wanted to stabilize our cost of living and establish ourselves in a community of our choosing. 

The survey taken by Lending Tree didn’t specifically indicate who they surveyed.  As they only referred to their group as “respondents,” we assume the surveyees were random.  They likely included homeowners and renters alike and had a mix of first-time and experienced home buyers and investors.  My initial surprise that only 41% of the respondent’s primary motive was a financial investment made much more sense as I thought it through.  I think like a realtor and a long-term homeowner.  Of course homeownership is a way to build wealth.  But a home isn’t is stock investment, a 401k, or even a personal business. It’s where we land at night after a hard day at work. It’s where we raise our family or let our dog play in the yard. (well, at least for some) It’s our port in a storm or the place where we relax on a sunny afternoon. 

It is so much more than a wealth-building investment, but it is that too.