Nearly a century of federal policy has pushed homeownership as a wealth-building strategy, but a new analysis from Cato Institute scholars Norbert Michel and Jerome Famularo shows renting and investing in diversified markets often yields superior long-term net worth.

Their research reveals it could take as little as three years or more than 40 years for buying to pay off versus renting, depending on location and market conditions. Using Zillow data and market scenarios for locations including San Jose and New Orleans, they demonstrate that high mortgage rates, low house price appreciation, and strong market returns typically favor renting, even for long-term residency.

The analysis comes as housing affordability dominates policy debates. Michel and Famularo argue policymakers lack objective reasons for tilting markets toward homeownership and should let individuals decide based on their circumstances.

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