In theory, owning your home isn’t always better than renting. It’s always worth running the numbers with your financial situation and local rents and real estate prices in mind.
But there are a bunch of practical reasons why owning your home is almost always a good investment.
One is that it basically forces good behaviour. Most people are far more reliable about paying their mortgage than they are with investing money each month. The renting vs buying comparisons tend to assume renters will invest the money they save, but that often isn’t true in reality.
A second reason is that it’s hard to panic sell your home. So even if home prices dip, there’s no real temptation to sell like there is with your investments in the market.
A third, related reason, is that people tend to live in the same house for a long time, and that gives the investment the time it needs to grow. It takes away the short-term mindset that people sometimes bring to other investments.
A fourth is that people tend to only watch home prices closely when they’re looking to sell, unlike with an investment account, which people are often tempted to check almost daily.
And a fifth reason homes are a good investment in practice is that the gains you make tend to receive good tax treatment, especially when it’s your primary residence.
So is buying and investing in a home a necessity for building wealth? No.
Does renting sometimes make more sense on paper? Yes.
But in practice, homes tend to make good long-term investments because they force good behaviour. You invest money into it regularly, you hold it for a long time, and the gains you make get favourable tax treatment.