Did you know that for every home that is sold $60,000 is pumped into the economy… and, that the real estate industry represents 20 percent of the national economy — and has for the past 50 years?
Real Estate is not only a good investment for long-term wealth, but buying and selling homes affects our economy as a whole for the better. Not only is money changed hands during the settlement process, but most people when they buy a home, do things like: go to home depot and buy paint, new appliances, general necessities…they go to furniture stores and purchase new furniture …they potentially do some renovation and hire contractors and purchase building materials. This is all good for local businesses and the economy as a whole.
At the same time owning a home, while also providing a significant tax deduction, allows people to feel a sense of pride of ownership. They can make changes to their home and personalize it. They can plant roots in neighborhood and are more compelled to get involved in their local community. Home ownership has many other non-financial implications that positively affect society.
The national media tries to paint the doom and gloom picture of the housing market and tries to scare people from buying and selling. The fact of the matter is that even in areas where the inventory is high and there are a still a lot of foreclosures, investing in a home is still a good bet.
During the housing boom between 2004-2006/early 2007, people began to look at homes as a way to make a quick buck and now people expect to make $100,000 or more after owning their home for just a few years. That was the problem and one of the reasons that the market had to adjust. Owning a home is a long-term investment that gives you benefits along the way. It shouldn’t be about “how much can I make on this home”, but how much you can enjoy living there and also take advantage of the tax benefits and the fact that you have a stable monthly payment (unlike renting where you can potentially see a 3% increase every year). The goal is also that if you stay in the home long enough, you should also walk away with more than you put into it. What other investment allows you to enjoy it while the money is invested and still get a return? Don’t be fooled, when you rent, you are paying for someone else to have the advantage of selling for a profit some day…you have paid their mortgage and when you leave, you get nothing.
That being said, borrowing money isn’t going to get any easier. Lending institutions want to make up for the past few years which means higher interest rates and more difficult qualifying criteria. I never want to “scare” people into buying a home, but if you are on the fence, now is the time…there is a cost to waiting and for some that cost may be that they have to continue renting or that they can purchase much less house than before because their buying power has been significantly reduced.