Considering The Economy, Is Buying A Home STILL A Good Idea?
Given the housing bubble burst, the credit crisis, and widespread foreclosures, you might question whether buying a home is still a good idea. However, it’s essential to weigh all the facts.
Don’t get spooked by the market… wherever it is at THIS moment…
Like any market, the housing market experiences fluctuations. This doesn’t make buying a home a poor investment. In fact, as a long-term commitment, homeownership remains one of the best investments you can make. Historically, real estate has steadily increased in value, despite occasional declines… due to local or national economic conditions. On average, homes appreciate around 5% annually.
This is one instance when 5% is worth WAAAY more than 5%…
While 5% may not seem like a significant return, it’s important to consider the broader context. For instance, if you put 10% down on a $200,000 house, your initial investment is $20,000. With a 5% annual appreciation rate, your home would increase in value by $10,000 in the first year. That equates to a 50% return on your $20,000 investment. If you invested that SAME $20,000 in the stock market and earned a 5% return, you’d only gain $1,000 in profit.
Uncle Sam wants to help…
You might think that while homeownership offers higher returns, it also comes with costs like property taxes. However, both property taxes and mortgage interest are tax-deductible, reducing your taxable income. Essentially, the government helps subsidize your home.
Yours to do with as you please…
Beyond the financial perks, homeownership offers non-monetary benefits. For example, if you’ve ever wanted to paint the walls of your rental apartment, you probably couldn’t. Or if something needed updating, your landlord may have refused to fix it. Owning a home gives you full control to personalize your space.
Then there’s Pride of Ownership…
You also benefit from home improvements, both financially and psychologically. Homes typically offer more space for living, storage, and outdoor activities, like barbecuing or providing a yard for pets and children. Additionally, owning a home brings a sense of pride, accomplishment, and elevated social standing.