NEW YORK (TheStreet) -- A study by Zillow.com finds than 10% of renters would like to buy a home in the next 12 months, a demand that could help speed the housing recovery. But what about the other 90%? By not aspiring to homeownership as soon as possible, are they condemning themselves to financial doom?
Not at all. While homeownership can improve chances of financial security, the key word is "can." It's not guaranteed. Homeownership can backfire.
In fact, many homeowners have a misconception about where the financial benefits of owning come from. It's commonly believed a home is a good investment. In fact, the benefit of ownership comes from reducing the cost of shelter over the long term, leaving the homeowner with spare cash to invest more profitably in assets such as stocks and bonds. The home itself can be a long-term money loser.
In other words, the financial benefits of ownership an be wiped out by owing too much home -- by buying an overly expensive home in the first place, or by constantly trading up.
Among the 90% of renters not likely to buy soon there are many who have sound reasons. Many are young people who will not stay put long enough to break even on a home if it were bought now. Others may feel they'll soon have to move for a job or better schools. Many don't have the cash for a down payment, and many know they can't qualify for a mortgage. And many renters simply prefer to leave the headaches of owning to someone else.