If you are looking to buy a home in 2018, early market news does not sound very promising. According to recent reports from Zillow and Realtor.com, prices are going up, mortgage rates are going up and inventory is going down. All across the country lack of available homes is creating a buying frenzy with bidding wars driving prices up even further. Add to that, the tax incentives for home ownership are now uncertain. If you listen to the reports, you are probably thinking, “Why bother?”
Renting does make sense at times. When you move to a new area that you are not familiar with, it’s a great idea to rent while you figure out where you want to settle down. When you are just starting out, renting an apartment with a group of friends is the way to go. When your future is uncertain, by all means, rent. However, there are still many reasons that buying makes sense as well.
One of the biggest reasons to seek home ownership is that buying allows you to invest in your home. Put simply, when you buy a home, you are paying rent to the bank. When you sell that home, assuming all goes well and you accrued some equity, you get that rent that you paid back in profits, so you basically lived there for free. That doesn’t happen when you rent.
Investing in your home can pay off over time, too. Real estate has a history of appreciation, even with the ups and downs of the market. Consider what your grandparents paid for their home. Is it worth the same amount today? Likely not. If your grandparents sold that home today, what would their profit be? More than they paid for it, most likely, and more likely than not, more than they paid for it with interest. And, even if it wasn’t worth more than they paid for it with interest, the home is now paid for, and what more can you ask for than that in retirement?
A family is another reason to own versus rent. Owning a house gives children a place to call home. They have a hometown, a community they know, and friends to grow up with. There will be a place to go home to on holidays when they have a family. There will be a place that their children know. Our nation is changing daily, but kids still crave routine, and a home is one way to give them that.
Lastly, don’t forget the American dream. It may have changed in recent years, but for most people, a home is still part of it. What you want just because you want it matters too.
If owning a home is a goal of yours, it can still happen. Interest rates remain historically low, making borrowing money less expensive than it has been in a long time. Rates went up in 2017, but even with those increases, rates are still lower than they have been since the 1970s. A lower interest rate means you can afford to finance a higher purchase price while still staying within your monthly budget. (To see the impact interest rates have on your payment, use this mortgage calculator from BankRate.)
In short, don’t give up on your dreams because of what you hear on the news. While it may not be fake news, it doesn’t tell the whole story, and it certainly doesn’t mean the end for you. You may have to look a little longer or look a few streets over from the neighborhood you want to be in, but your dream is still within reach.