For middle-class Americans, housing is of utmost importance and the greatest source of net worth. However, the current homeownership rate in the United States is at a near-record-low not experienced in decades, in spite of the record-low home mortgage interest rates and real estate market conditions in which the cost of renting is just as or more expensive than buying a home on a monthly cash outflow basis in many geographic areas. This article examines the rate of return on homeownership when using Federal Housing Administration (FHA) home mortgage financing under the current real estate market conditions.
Clarence C. Rose, PhD, is a professor of finance and director of the Center for Financial Education in the College of Business and Economics at Radford University in Radford, Virginia. He has published numerous refereed journal articles in topic areas such as Social Security retirement decision-making, tax-sheltered retirement investment planning, investment portfolio management, real estate finance, and real estate investment analysis. His work has been cited in the Wall Street Journal, Money magazine, Mutual Funds magazine, AARP the Magazine, and other national publications.