Misconception # 3 Buy vs Rent...

Misconception No. 3
It’s better to rent and wait for the market to bottom out.

The Reality – Despite recent challenges in the U.S. housing market, buying a home remains a highly sound financial decision for those with documented income and a good credit history. Yet some buyers are still sitting on the sidelines trying to time the market bottom – which is always ill-advised.

By the time most folks recognize the true bottom, prices are already on their way up. Buying a home should always be approached as a good long-term investment, providing equity accumulation, cost appreciation and tax benefits over time. Homeownership is a lifestyle decision, a highly personal decision. Yet today’s current market, while different from market-to-market, is generally typified by falling or stable home prices, still-low interest rates, and a large number of homes on the market. Historically, low or falling interest rates allow more to enter homeownership which in turn helps trigger rising housing prices – resulting in the start of a “sellers market.” As the number of consumers are “priced out”, home inventory begins to increase and the cycle goes towards a balanced or even a “buyers” market. Prices will generally stabilize allowing economic conditions for those “priced out” to improve and the cycle begins again. The reason why many point out that now is a smart time to buy is because of the historically low interest rates we are seeing coupled with the buyer’s market which exists in most communities. Speaking with a knowledgeable real estate professional can help one navigate the nuances of a specific market, including how interest rates are impacting home prices and financing options in that region.

The most important thing to remember is that housing is not a quick-in, quick-out investment. When purchased with the longer term in mind – with proper guidance from a real estate professional and other savvy financial or legal professionals – housing is one of the historically safest investments consumers can make.