Does Renting Make Sense Given The Bad Real Estate Market
Does Renting Make Sense Given The Bad Real Estate Market
One of the basic tools used by financial advisors is to show their clients the advantages of homeownership versus renting. As you’ve probably heard, renting always seems to come out as the bad option. Many are starting to question whether that is still the case.
Regardless of where you turn these days the news regarding the real estate market is bad. Prices are falling. Lenders are not lending money. Foreclosures are going up. The Federal Reserve is going to raise rates. As I write this, the federal government is announcing that there will be no bailout of Fannie Mae. While that is good news, the fact that the financial viability of Fannie Mae is even being questioned is very scary.
Given all of the negative signs in the real estate market, we need to return to the fundamental question of whether buying a home now is a good move. There are many caveats that go into the answer, but we are going to ignore them. We are going to assume you are moving into a solid neighborhood, the home is in decent shape and the price is within a reasonable range of its appreciated value.
So, should you buy? The answer is yes! Not only that, there hasn’t been a better time to buy in the last 8 years. With the real estate market going down, you’re probably wondering how I could be taking this positions. Well, think it through.
People will always need a place to live. They needed homes 80 years ago. They will need them in 80 years. Unlike the stock of a company that can go up or down or even become utterly worthless, a home has an inherent value because it is real property. This means that sooner or later, the market will turn around. When it does, you want to be a homeowner so you can reap the benefits of the rebound.
Home values are falling. Practically every bit of news related to the real estate market is negative. Simply put, it can’t get much worse than now. That means it is time to buy. If we are not at “rock bottom”, we are mighty close. You might see the home you buy lose a bit more value through 2008 and even 2009, but what do you think it will be worth in 2011? A lot more than you buy it for if you act now.
The real estate market will rebound. In fact, it is going to rebound strongly and a lot of people are going to make some serious money. We are at or near the bottom. There is no better time to buy and reap the benefits when things turn around. In comparison to renting, well, there is no comparison.
Raynor James writes about issues faced by FSBO sellers for FSBOAmerica.org where you can list your property for sale by owner for free for 1 month.
Does Renting Make Sense Given The Bad Real Estate Market / Author: Raynor James
