When I started my real estate career way back in late ’80’s it was accepted wisdom that you are only a renter until you can scratch your way into owning. The question was not, “should you buy” it was “when will you buy?”
It wasn’t easy to buy a home back then. Interest rates were double digits, high unemployment rates were a very fresh memory and the collapse of the junk bond market and the savings and loan crisis were our corporate finance debacles of the day.
But the American Dream of homeownership was unassailable.
“The only thing that remains the same is change”
According to many financial wags and grey beards, times are more difficult now than they were in the Great Depression. Unemployment, education, health care, social security; everything is in a crisis mode. These institutions help make the fabric of our identity as Americans- and each one is being forced to change.
The institution of Home Ownership is no different.
Now, as a card carrying member of the Real Estate Industry, I am required to tell you that real estate is the greatest wealth building vehicle in America and all manner of personal sacrifice is worthy in order to call oneself a “Homeowner” (cue Tabernacle Choir and Heavenly Light).
Now, don’t get me wrong. I’ve read all the articles and analysis on home ownership. From a pure financial perspective it makes all the sense in the world to buy. I would argue, however, that for most people a home is a lot more than a financial decision.
The hard truth is that many can not afford their important priorities in life and the houses that match. For example, if your priority is being close to family, and your family lives in an affluent area, should you live in a remote area just to afford a home? What if your priority is spending time with your kids, but the only areas you can afford are an hour commute to your work?
This does not mean you should NOT buy a home.
Buying a home means you get to participate in the only significant tax break available to most Americans. Homeownership is also the most common vehicle for wealth creation.
When you are a renter, the landlord controls your payments, the condition of your dwelling and, even, your right to stay in the home. As a homeowner you have far more control over your environment.
Lastly, owning a home encourages a sense of connectedness to a community and, in turn, a strong community creates higher home values.
What should YOU do?
I think you need to carefully assess your own priorities and pit them against your budget.
Can you afford a home that suits your priorities?
How important is wealth building to you?
Can you build that wealth in some other manner?
How important is a sense of permanence and control to you?
The answers to these questions should help you make your decision. The one thing I implore… do not buy because some idiots say you are “lessor than” if you do not own your home.
It is a fantastic time to buy.
Affordability is at an all time high and everyone expects inflation to bite us, hard, at some point in the near future. While inventory is low and the buying environment is competitive, great homes are being bought every single day.
Should one of those homes be yours?