5 Reasons Why You Should Buy a Home Today
by Steve Harney on July 27, 2010 ·
Homeownership almost seems like a dirty word in today’s society. People are blogging, tweeting and facebooking their belief that buying a home is just plain stupid. I respect their opinion on the issue though I totally disagree. Why?
This might be the best time to buy a home in American real estate history.
Some might think I’m crazy. Cynics might think that I am saying this because I still hold a real estate license (though I have not listed nor sold a home in ten years). My reason for saying it is actually quite simple. Owning a home makes more sense than not owning a home for the vast majority of families in this country. Let me give you five reasons why.
1. Real Estate is a Great Long Term Investment
Don’t take my word on this. This is what Mike Mandel, former chief economist at BusinessWeek and current Senior Fellow at Wharton’s Mack Center for Technological Innovation, had to say:
We’ve just had the biggest boom and bust in real estate in recent history. Nevertheless, real estate has still greatly outperformed the stock market over the past ten years.
Below is his chart actually showing the difference between real estate and the stock market.
2. A Home Is a Better Place to Raise a Family
Don’t take my word on this. When Fannie Mae asked current renters for the major reason to buy a house in their National Housing Survey 2010, these were the answers renters gave (they could pick multiple answers):
- 78% said it was a good place to raise children
- 75% said because they would feel safe
- 70% said because you have control of your own space
3. A Home Creates a Sense of Community
Don’t take my word on this. The Federal Reserve Bank of New York just published a paper The Homeownership Gap. The paper explained:
Because owners have a financial interest in their property, they have incentives to take measures that will maintain or increase the value of that property. Some of these measures—such as fixing a leaky roof—are closely related to the house itself. Others, such as investing resources in the betterment of the neighborhood and the community, have broader beneficial effects on the local area, creating what economists call “positive externalities.”
4. It’s Cheaper to Own Than Rent in Many Parts of the Country
Don’t take my word on this. Housing Wire just reported on a Credit Suisse study:
While a segment of the renting population continues to rent, many are looking to dip their toes in the homeownership waters. Credit Suisse said the percentage of median household income needed to pay the mortgage on a median priced home is at a 30-year low… Low mortgage rates and property values makes homeownership more attractive than renting for many. In many markets — including Washington DC, California’s Inland Empire, Las Vegas and Phoenix — paying for a mortgage is less expensive than renting.
And here is a graph from the study:
5. The People Who Do Buy a Home Don’t Regret It
Don’t take my word on this. Probably the best people to ask if buying a home makes sense are the people who currently own homes. A recent national poll commissioned by Bankrate.com found:
Ninety percent of homeowners say they don’t regret buying their home despite a nationwide tsunami of foreclosures, short sales and loan modifications.
It’s a great long term investment. It’s a great place to raise a family. It gives you a greater sense of community. It’s less expensive than renting. People who currently own have no regrets. Buying a home seems like a no brainer to me.