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Is it better to rent or buy?

A financial adviser uses simple math to show how you can make the most money.

TAMPA, Fla. — With the housing market hotter than ever, people are paying a premium and sometimes getting into bidding wars to buy a home. 

But is it smart to buy a home when prices are so high? What about renting?

We've all heard it, 'renting is just throwing your money away!' Not everyone agrees. A certified financial planner says in most cases, simple math shows that statement is just not true.

"On average homes lose 11% per year in total returns, so it's actually about the worst investment, if you will, that you can make despite the fact that 8 out of 10 Americans think it's the best investment." Certified financial planner and Fiduciary, James Di Virgilio lays out this scenario for a person putting 20 percent or 60 thousand dollars down on a 300 thousand dollar home they plan to live in for the next 30 plus years. 

"If you start with that and then you begin to factor in all your costs, my mortgage payment, my property taxes, my maintenance, my real estate costs. When you begin to add up all those costs throughout the course of the lifetime of the home, they become quite significant."

But say you rented a home and took that 60 thousand dollars and invested it. "Those are your two choices: your home and the US stock market. The 60 thousand dollars 50-60 years from now is going to become around 1.5 million dollars if you get 10% a year. Again, that's the historical average for the stock market."

A couple more things: Di Virgilio says yes, people do make money in the housing market by flipping homes and owning rentals, but that's not what we are talking about. We are talking about the home you live in. And he says he's not against owning a home. There are definitely good reasons to buy a home, but he says a financial investment isn't really one of them.

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