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.
Metro Brokers Of Oklahoma
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Cindy is the utmost professional bringing all her expertise but also a personable, friendly perspective during a house hunt. She helped us look ALL DAY LONG and gave us terrific advice and feedback. She helped us purchase our dream house and we highly recommend her. We hope to stay in this home forever but if we ever did move again, there would be no doubt who to call.
Julia Wagner Leinen
Cindy was such a blessing to my husband and I when we were looking to buy our first house. She carefully sought out houses and neighborhoods that's would fit our needs. She gave us multiple options and was always available when we had questions. When we finally decided on a house, she did an awesome job communicating with the sellers, and working out a great deal for us! I thought buying a home would be so stressful and hard because we are young and don't know much about real estate. But with Cindy, it was a breeze and an exciting process! I can't think of anyone else I would rather have partnered with when looking for a home for my family!
Mike and Kaci Moore
Cindy is a superb realtor and guided us through every step of the home-buying process with the upmost professionalism. She was easy to reach and always kept us updated on the status of our paperwork. We couldn't be more be pleased with Cindy and recommend her without hesitation to anyone wanting to buy or sell a home.
Brian and Maria Sargent
Cindy was so easy to talk to & made us feel comfortable as she walked us through the processes step by step. She updated our education on Oklahoma properties. When I was fretful, she would remind me that God would lead us to the right place. After a snafoo after closing, she jumped at the chance to make things right. Thank you, Cindy! Don and Sue Ann Wagner
I know she's my mom, but she worked her hinny off helping Brandon I buy a house in 2013! She was so patient and helpful! Brandon and I didn't know the first thing about buying a house, credit, or anything and she walked is through it!
Brandon and Ashley Kirby