With the burst of the housing bubble, credit crisis, and millions of foreclosures across the country, you may wonder if buying a home is such a good idea after all. However, it’s important to consider all of the facts. The important message to take away from these events is not that buying a home is a bad idea, but that you must be smart about buying your home.
The housing market, like every type of market, unavoidably has its ups and downs. That doesn’t mean buying a home is a bad investment. As a long-term investment, homeownership is still one of the best investments for individual households. Historically, real estate has consistently increased in value, despite shorter periods of depreciation due to local markets and/or national economic conditions. The data shows that homes generally appreciate about 5% per year.
Savings & Investment
Five percent may not seem like a great return on investment, but you have to think about it in the context of the situation. For example, let’s say you put 10% down on a $200,000 house. That’s a $20,000 down payment, or initial investment. At a 5% annual appreciation rate, your $200,000 home would gain $10,000 in value during the first year. Earning $10,000 on an investment of $20,000 is a whopping 50% return.
For further perspective, let’s say instead of spending that $20,000 on a down payment, you invested it in the stock market. With a 5% return, you would gain only $1,000 in profit.
So now you’re saying that a home may have a higher return, but that’s before you consider all of the costs of home ownership, such as taxes, etc. Well, think of it this way: your property taxes as well as the interest on your mortgage are both tax deductible. You can deduct those costs from your income, thus reducing your overall taxable income. In other words, the government is subsidizing your home.
It’s easy to get carried away with all of the economic reasons for home ownership, but it’s important to remember that not every reason is financial. Have you ever wanted to paint the walls of your apartment? Well when you’re renting, you can’t. Has anything in your apartment ever needed updating, but the landlord refused to do it? When you own a home, you can make the space yours in almost any way you want. And you benefit when you do home improvements, both financially and psychologically. Homes generally have more space, for storage, living, etc. than other living arrangements. Not to mention that you have space outdoors for barbecuing, pets, and kids. Owning your home carries with it a sense of pride, accomplishment, and even an elevated social status.
So when you’re considering buying a home, consider the broad range of benefits that owning a home can have. And always make sure you have an experienced real estate agent and loan officer to help make sure you’re getting a home that is right for you, both financially and psychologically.
Thank you for visiting today. If this is your first visit, take your time and look around. I have plenty of information and resources available to you. If you are a return visitor, thank you. I would love to hear from you and tell you how I can serve all your real estate needs.
I got lucky, being referred to Caren by the realtor.com system as I searched for distressed properties. She helped me organize my search. She responded quickly to my requests to show a home and displayed great patience during my time consuming process of inspecting each home; even pointing out potential issues I hadn't noticed. She provided referrals to insurance and financing professionals. I'm happy with the house I bought and its price. I plan to use Caren to sell or rent the house and to help me find the next one. I found her honest, straightforward and a pleasure to work with.Rick W.
I researched many realtors and once I read about and then spoke with Caren, I instantly realized how professional and knowledgeable she was...definitely a cut above other realtors! I inquired Caren's help to sell my home and not only did she go above and beyond helping me get my house ready and presentable to sell (I live out of state so there were many things needing done, including meeting with carpenters to yard workers, and in some cases doing some of the work herself, at no charge)! She topped it off by following through with her promise and selling the home in 6 weeks!!! I have done business with many realtors all throughout my life and throughout this great country. I could tell she genuinely cares, puts her clients first and is by far the best in this region, if not the country! Bottom line is she is real and has a big heart when it comes to her clients! Thanks again Caren, you alone made my transition stress free and showed genuine care! The next house I buy I know who I'm coming to....Caren Mulay! Hope all is well Sincerely, Eric RothEric Roth
My husband and I found Caren to be honest, efficient and straightforward, rare qualities in the real estate world.Linda W.