It is traditional wisdom and the mantra of the real estate industry that to BUY a home is your best long term financial move. In this turbulent market atmosphere it is time to review.
Why did you (want to) buy a home in the first place? When you think about buying a home do you analyze the home like a stock investment or do you focus on how it makes you feel. You know, your gut feeling. How many times have people said “We just fell in love with our home”? Not many people say the same thing about a stock pick!
Buying a home because you “love it” is fine! Just realize that is what you are doing. We have been programmed to buy a home, pay it off and live in it as long as we can or sell it and move into a larger home. Ownership conveys security. A warm fire on a cold night. A green lawn to play catch with our kids and pets. Marks on the kids doors as they grow. Growing equity as the home continues to appreciate. Security in our golden years.
How nice…..
According to these calculator links, it is possible that your best FINANCIAL investment is NOT to buy, but to rent – forever.
Go ahead, look at these calculators. If you rent for the rest of your life and invest the difference between renting and buying, you may be surprised at how much better off financially than you would be if you bought. Of course this is dependent on the specifics you plug into the calculator’s and your ability and discipline to invest wisely and consistently. Look at this calculator from Ginne Mae (Federal Gov).
Next take a look at the New York Times calculator. Remember to be realistic and use historical home appreciation rates. Obviously 10% per year appreciation on a purchase cannot continue forever.
If you Rent, the fireplace is just as warm, the grass is just an green and the growth marks on the doors cover up with paint. As long as you are there it is your “home”.
If you Buy after investigating all the options, you are doing so with the knowledge that you have looked at all sides of the question. In most cases, buying will prove to be better financial choice. Some will decide that for them, renting is best.
Do the math then search your heart.
There is a lot to be said for emotional security. Do not try to time the bottom of the market, you can’t. If you find a home that you “fall in love with” AND you can afford it AND you intend to stay in the home for 5 years or more, Buy it!
Wait a minute, isn’t that the smell of fresh apple pie cooling in the kitchen?
Marston
