The “American dream” of home ownership is, unfortunately, becoming just that; a dream. Many Americans can no longer afford to buy a home and, with the recent housing bubble and current foreclosure crisis, many once common beliefs about buying a home have changed drastically during just the last 10 years.
Below you’ll find 5 of them. If you’re thinking of purchasing a new home, you should definitely read these closely and then make your decisions. Enjoy.
Belief #1: A house is one of the best investments you can make
If there’s one thing that many consumers found out in the last decade, it’s that the housing market, in many cases, is just as risky and prone to ups and downs as the stock market. Indeed, the average home in the United States lost a third of its value in the last 10 years and, while prices have risen a measly .3% annually, the return on the S&P 500 has been averaging 8.26%. It seems, today, investing in a home isn’t the best idea in terms of returns.
Belief #2: It’s better to buy a home than to rent
It used to be that, if you rented an apartment (or a home) people thought you were crazy because you were “losing all that equity”. Today however, many markets around the United States have simply become too expensive. For example, in New York City, the average cost to buy a home is approximately 24 times the cost that you will pay to rent one. Depending upon your income and your overall situation, renting a home might just be better than buying.
Belief #3: Location is the most important factor when purchasing a home
It used to be that, if you wanted to find the “perfect home”, you needed to look in older, more established communities that had great schools, were far from airports or heavily used roads, and had low crime rates. Today however that’s just not the case and, in many circumstances, you can find an excellent deal in some neighborhoods that haven’t yet “reached their peak”, so to speak. In other words, potential growth and what a location may look like in the future is more important, in some cases, then finding the perfect location right now.
Belief #4: Purchasing the “worst home” in the “best neighborhood” is a good idea
On the outside, this seems like good advice. It’s certainly easier to “fix” a home than it is to fix the town where it’s located. The only problem is that a bad home can come with some serious problems and, since most Americans don’t have the skills needed to make home repairs themselves, those problems translate into a lot of wasted money. In some cases, you might end up spending more money on a “fixer upper” in a great neighborhood that if you bought a great home in a decent neighborhood.
Some of the 4 Beliefs we’ve just mentioned might have opened your eyes to some startling facts. Owning a home is still an American dream but, unless you’re careful, it can also become a nightmare. When contemplating the purchase of a new home, make sure to do your due diligence, look for outside help and take your time