The impact of housing choice on future household wealth

The choice of housing is one of the major decisions facing households and all must decide whether a home should be owned or rented. In Canada, 64.2% and in the United States 67.8% of households now own their homes and this figure has been gradually increasing after a period of decline during the 1980s. A financial model is introduced that can be used by households and their advisors to comprehensively analyze whether a house should be purchased or rented. With an information set regarding the choice of buying or renting a home, the expected financial outcome can be estimated and the household can decide if buying is financially wise. The model is empirically illustrated with 2 case studies using average housing data and a spreadsheet template derived from the model. Reasons a household would buy a home are considered.