Monday, August 30, 2010

Reasons to Own Your Home

The last few months, since the expiration of the Federal Housing Tax credit in April, has been little but bad news for the real estate market from the recent statistics showing a 27% fall in sales compared to last year, and the possibility of prices dipping even more. The media has been trumpeting the death of home ownership, and the public has become increasingly scared of owning a home.

Adding to that mix, are experts that believe that home ownership will never yield the rewards seen in the the past decade. These opinions should be taken with a very large grain of salt, and smart buyers should be aware that home ownership is still one of the best investments you can make for your family's future.

Why? Because housing is notoriously cyclical and the experts who make these doomsday claims are sensationalized by the media hunting for the next disaster story. No doubt housing looks bleak right now, but shelter is a fundamental need, and as bleak as things may seem now, the housing economy will return. Those who invest now will have gotten the best value for their dollar.

To see this in more concrete terms, examine articles from the mid to late 1980s, when America was in its last housing crisis. An article from the New York Times in 1983 with the headline "A house, once again, is just shelter," sounds eerily familiar: "For a long time, equity in a house was like money in the bank, a reliable asset that would grow steadily and be available for a rainy day...But now, for the first time in a generation, housing has gone sour. House prices are stalled or even falling...The era of guaranteed profits from residential properties has ended...''People took it as a canon of religion that this was the way to wealth -that the house would be worth 10 times more 10 years from now."

Today's experts echo that exact same sentiment, yet the most recent housing boom proved the "experts" from the 80s wrong. Those who bought homes then, saw their homes increase in value even after adjusting for the most recent correction.

Despite what the experts say, housing is a sound investment in your family's future. Mortgage rates are incredibly low, and there is plenty of stock to choose from. The key is to buy smartly and within your means; Overextending to buy a home is bad financial planning regardless of the economy, but particularly so now.

So what makes home ownership right for you? In an interesting opposite view to their recent articles condemning housing, the NY Times put out an article that describes why housing is still a great idea for some. The article is worth reading but in short, it provides a forced means of building equity, never having to deal with a difficult landlord again, and the ability to live in a nicer part of town where rentals are not the norm.

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