Homeownership Is Still A Smart Decision

You’ve all heard the news reports saying that the housing market is in turmoil, and that home prices are falling, stalling or playing the jumping game!  Plus that it is tougher to get home financing.  So does this mean it’s time to continuing renting or sell and start renting?

Take a look at factors David Bach, author of several books, believes you need to know about homeownership:

1.  Homeownership is a solid Long-Term Investment.  In fact, it’s probably the smartest investment you’ll every make…. it is a critical contributor of financial well-being for American families for decades.  The housing market has steadily appreciated since the 1950’s. 

2.  The IRS give big advantages to homeownership.  The IRS provides tax breaks by allowing you to deduct your mortgage interest, insurance and property taxes to exempting capital gains taxes on your primary residence, within limits.  Sometimes, your mortgage payment (after the tax benefits) is similar to the current rent payment.

3.  For the most part, home values will continue to rise.  In San Diego County, homes in various areas are continuing to appreciate in value.  Yes, there are many areas that are decreasing due to the sub-prime loans and general economy.  Since 1975, and through recessions and expansions, the average annual appreciation rate for the typical home is 5.9%.

4.  What the market is doing nationally is irrelevant to you. As I mentioned in my February 21st post, the media’s negative comments do not take into consideration that real estate is specific to local markets… even specific neighborhoods in a zip code.  San Diego’s real estate market is very different from other areas… even those close to us like Los Angels or Las Vegas.

Rely on your real estate agent, who can tell you a lot more than just listing prices…. ask about days on the market, the local housing inventory, the perceived selling trend in the specific neighborhood, and actually selling prices to get an accurate picture of your local market.  Headlines are used only to sell newspapers!

5.  Buying opportunities have improved.  Our housing inventory has increased, making this a buyers’ market.  Most sellers are more willing to make concessions on price and other terms.  Mortgage rates remain low by historical standards, and though lending terms have become more stringent, borrowers with good credit probably won’t notice much difference.

6.  Don’t worry about timing the market.  In an ideal world, you would make a purchase at the lowest price, whether buying a home, a business or a stock, and then sell at the highest price.  As I said, that would be ideal…. don’t let it keep you from buying a home today.  It’s the time in the market not timing the market to purchase.  In other words, if you are making a long-term investment, 5 years or more, then you are usually better off just buying when you want your home.

7. Smart home financing options are still available.  There is a wide array of mortgage products out there… be sure you understand what you are getting.  Ask questions to receive the complete picture on what your mortgage terms are.  Work with a lender who takes the time to understand your financial circumstances and preferences… and ensures that you receive the necessary information to make an informed decision.

Remember….. homeownership is the American dream and a way to move ahead financially.  Don’t assume that this is a bad time to buy your home or invest in real estate for your future wealth.  Also, remember that headlines are to sell the newspapers!

Dee Marie Fisher

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