For a long time, conventional wisdom seemed to be that you grow up and buy a home because that’s just what you do. But lately, people are realizing that it isn’t always the smartest financial move. Obviously, the housing crisis has a lot to do with that—it’s made people question the standard assumption that homeownership equals financial stability.
Homeownership isn’t a good or bad idea on its own. It has everything to do with your own situation. Sometimes, buying a home is the smart thing to do; other times, it really isn’t. Whether or not it’s smart for you will depend on a few different factors. Here’s what you should keep in mind.
The biggest argument for owning a home is that it’s an “investment.” But a lot of people tend to overestimate the return on this investment.
People tend to believe that homes are appreciating assets, but this isn’t always true. Overall, the housing market doesn’t have a great long-term return. It barely outpaces inflation, in fact.
| Abdullah & Associates, 12150 Lakeshore Dr, Clermont Fl 34711 |
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| Absolute Homes Realty, 15833 Robin Hill Loop, Clermont Fl 34714 |
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| Alderman Properties, 442 Village Ct Unit A, Clermont Fl 34715 |
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| Alpha Acquisitions, Po Box 121065, Clermont Fl 34712 |
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| Alpha Properties Group, Po Box 121065, Clermont Fl 34712 |
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| Avalar Real Estate Services, 17301 Pagonia Dr Ste 300, Clermont Fl 34711 |
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| B N B Realty, 301 W Pearl St, Clermont Fl 34715 |
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| Bardell Real Estate, 9110 Us Highway 192, Clermont Fl 34714 |
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| Bon Jorn Real Estate, 1500 S Us Hw 27, Clermont Fl 34711 |
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| Boss Group International, 836 W Montrose St # 10, Clermont Fl 34711 |
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| Cagan Management Group, 16554 Crossings Blvd. Ste 1, Clermont Fl 34711 |
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| Cagan Management Group, 16554 Crossings Blvd. Ste 4, Clermont Fl 34711 |
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| Cam Realty And Property Management, 15701 State Road 50 Ste 204, Clermont Fl 347 More ... |
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| Can Realty, 1104 Spruce Ridge Ct, Clermont Fl 34715 |
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| Central Florida Property Management Services, 2256 Addison 2256 Addison Avenue, More ... |
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| Central Florida Realty Connection, 2256 Addison Ave, Clermont Fl 34711 |
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| Central Florida Realty Group, 1869 Sanderling Dr, Clermont Fl 34711 |
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| Central Florida Referrals, 300 E Highway 50, Clermont Fl 34711 |
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| Century 21 World Properties, 1100 Us Highway 27, Clermont Fl 34714 |
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| Certified Real Estate Investments, 1100 Us Highway 27, Clermont Fl 34714 |
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| Crystal Realty Group, 301 N Hwy 50 Suite G, Clermont Fl 34711 |
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| Dave Ellis Realty, 17338 Chateau Pine Way, Clermont Fl 34711 |
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| Doran Real Estate Company, 481 E Highway 50 Ste 204, Clermont Fl 34711 |
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| Elite Properties Group Of Lake, 481 E Hwy 50 Box 2 Suite 206, Clermont Fl 34711 |
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| Elite Property Sales, 13312 Fountain Bleau Dr, Clermont Fl 34711 |
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| Elite Rental Management, 787 N Waterview Dr, Clermont Fl 34711 |
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| Equity Savers Realty, 4050 Beacon Ridge Way, Clermont Fl 34711 |
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| Estate Agents Realty Services, 1829 Ramie Rd, Clermont Fl 34711 |
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| Extreme Homes And Land Group, 304 Mohawk Rd, Clermont Fl 34715 |
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| Fallman Design Construction, Po Box 121746, Clermont Fl 34712 |
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| Fallman Real Estate, Po Box 121746, Clermont Fl 34712 |
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| Firm Real Estate Professionals, 12471 Hull Rd, Clermont Fl 34711 |
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| First, 511 Sugar Pine Dr, Clermont Fl 34715 |
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| Florida Exclusive Realty, 1428 Sunrise Plaza Dr Ste 2, Clermont Fl 34714 |
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| Florida Home Investment Realty, 17305 Chateau Pine Way, Clermont Fl 34711 |
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| Florida Home Sales, 3806 Thornewood Way, Clermont Fl 34711 |
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| Florida New Homes, Po Box 137051, Clermont Fl 34713 |
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| Florida Plus Realty, 241 N Disston Ave, Clermont Fl 34711 |
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| Florida Property Shop Sales & Rentals, 101 E Highway 50, Clermont Fl 34711 |
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| Florida Real Estate Center, 234 Mohawk Rd, Clermont Fl 34715 |
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| Florida Realty Trust.com, 234 Mohawk Rd, Clermont Fl 34715 |
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| Fritz Real Estate & Auctions, Po Box 121279, Clermont Fl 34712 |
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| Fritz Real Estate Company, Po Box 121279, Clermont Fl 34712 |
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| Geer Realty, 3356 Tumbling River Dr, Clermont Fl 34711 |
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| Globus International Realty, 11228 Country Hill Rd, Clermont Fl 34711 |
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| Grp Enterprise Realty, 1717 Burnham Ct, Clermont Fl 34714 |
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| Hancock Real Estate, 1008 East Ave, Clermont Fl 34711 |
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| Hancock Realty Team, 12154 Goldenstar Ln, Clermont Fl 34711 |
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| Helping Hand Services, 2256 Addison Ave, Clermont Fl 34711 |
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| Heritage House Realty Int'l, 12807 Colonnade Cir, Clermont Fl 34711 |
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| Hickory Hill Realty Services, 14921 Green Valley Blvd, Clermont Fl 34711 |
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| Highland Real Estate & Investments, 1135 East Ave, Clermont Fl 34711 |
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| Homeland Florida Realty, 9310 Us Highway 192 Ste 108, Clermont Fl 34714 |
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| Homes Of America Realty Group, 17445 Us Highway 192 Ste 15, Clermont Fl 34714 |
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| Infinity Real Estate, 11533 Kanuba Ct, Clermont Fl 34715 |
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| Ipg Realty, 9550 Us Highway 192, Clermont Fl 34714 |
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| Jade Realty Group, 2891 Sandy Cay St, Clermont Fl 34711 |
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| Jaymark Realty, 230 Mohawk Rd, Clermont Fl 34715 |
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| Jcl Management Services, 635 W Highway 50 Ste B, Clermont Fl 34711 |
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| Jcl Real Estate Services, 635 W Highway 50 Ste B, Clermont Fl 34711 |
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| John Edwards Realty & Investment Properties, 221 N Highway 27 Ste F, Clermont Fl More ... |
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| Keller Williams Classic Iii Realty, 1200 Oakley Seaver Dr Ste 212, Clermont Fl 3 More ... |
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| Keller Williams Classic Vi Realty, 1200 Oakley Seaver Dr Ste 109, Clermont Fl 34 More ... |
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| Knotts Enterprises, 15840 State Road 50 Lot 197, Clermont Fl 34711 |
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| Lake County Land Company, Po Box 121216, Clermont Fl 34712 |
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| Land And Homes Real Estate, 8709 Augusta Ct, Clermont Fl 34711 |
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| Langley's Gem Of The Hills Realty, 450 E Highway 50 Ste 4, Clermont Fl 34711 |
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| Latitude Sales And Marketing, 25 Town Center Blvd, Clermont Fl 34714 |
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| Lft Realty, 13501 Laranja St, Clermont Fl 34711 |
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| Mcclung & Associates, 100 N Highway 27 Unit A, Clermont Fl 34715 |
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| Miami Orlando Realty, 1684 Turnstone Way, Clermont Fl 34711 |
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| Micki Blackburn Realty, 450 E Highway 50, Clermont Fl 34711 |
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| Mizz Realty Group, 15701 Starlite St Ste 201, Clermont Fl 34714 |
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| Mosaic Services, 14427 Peppermill Trl, Clermont Fl 34711 |
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| Multi Choice Realty, 1536 Sunrise Plaza Dr Ste 102, Clermont Fl 34714 |
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| My Real Estate Buyer, 2550 Citrus Twr Blvd Ste 4203, Clermont Fl 34711 |
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| Nevius Group, 14518 Pine Cone Trl, Clermont Fl 34711 |
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| Nexthome Lott Premier Realty, 2332 Zaltana Cir, Clermont Fl 34715 |
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| Northstar Realty Services, 301 N Highway 27 Unit C, Clermont Fl 34711 |
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| Number One Choice Realty, 569 Mar Nan Mar Pl, Clermont Fl 34711 |
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| Omni Real Estate & Investment, 600 N Hwy #4, Clermont Fl 34715 |
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| Optima One Realty, Po Box 120508, Clermont Fl 34712 |
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| Orlando Homes And Investments, 12914 Magnolia Pointe Blvd, Clermont Fl 34711 |
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| Our Home Realty, 18015 Victorian Dr, Clermont Fl 34715 |
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| Partners Realty Services, 13200 Anderson Hill Rd, Clermont Fl 34711 |
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| Phoenix Realty International, 14747 Green Valley Blvd, Clermont Fl 34711 |
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| Precious Realty Group, 3542 Wind River Run, Clermont Fl 34711 |
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| Preferred Properties Group Of Central Florida, 205 Grassy Lake Rd, Clermont Fl 3 More ... |
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| Preferred Real Estate Brokers, 597 Autumn Ash Dr, Clermont Fl 34715 |
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| Presco Realty, 232 Mohawk Rd, Clermont Fl 34715 |
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| Proliant Realty, 1228 Shorecrest Cir, Clermont Fl 34711 |
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| Property Management Professionals, 234 Mohawk Rd, Clermont Fl 34715 |
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| R K Mitchell Realty, 2124 Addison Ave, Clermont Fl 34711 |
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| Randall B Langley Licensed Real Estate Broker, Po Box 120355, Clermont Fl 34712 |
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| Re/max Results, 3735 S Highway 27, Clermont Fl 34711 |
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| Real Estate Authority, 6825 Lake Kirkland Dr, Clermont Fl 34714 |
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| Realteam Realty, 826 W Desoto St, Clermont Fl 34711 |
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| Realty Choices, 12624 Lakeshore Dr, Clermont Fl 34711 |
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| Realty Professionals Of Florida, 300 E Highway 50, Clermont Fl 34711 |
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| Realty Savers Of Central Florida, 2284 Calvert Ct, Clermont Fl 34711 |
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Over the past 100 years, home prices have only grown at a compound annual rate of 0.3%, adjusted for inflation. The S&P 500, on the other hand, has had an annual return of 6.5%. That’s a big difference.
While that single real estate asset might help protect you against inflation, a well-balanced stock and bond portfolio seems to be a better investment. But a lot of people’s portfolios are mostly made up of their home value. You wouldn’t put 80 percent of your portfolio in a bond simply to protect against inflation (unless maybe you were nearing retirement) so why would your home make up that same amount? That’s the argument against buying a home as investment.
When making the decision it is important to understand that buying a home might not be a great financial investment and to not forgo all of your investable assets in order to purchase a home because you are really purchasing a right to housing and not a long-term investment designed to generate income.
Most experts agree that while housing is an investment, it’s not a great investment. So if this is your only basis for buying a home, it’s probably not the best one.
Decide How Much You Can Afford: In deciding whether you can afford to buy, you’ll have to figure out how much home you’re planning on buying in the first place. One rule of thumb for figuring out this number: your home should cost no more than 2.5 times your salary. Of course, this just gives you a ballpark figure. It doesn’t consider your net worth.
Weigh the Opportunity Cost of Renting Versus Buying: While your home might not be the best investment, in the end, it’s still yours. Even if it barely outpaces inflation, at the end of the day, you own it, and that’s worth something. When you rent, you own nothing—the money is given to someone else. So lots of people argue that you should own a home because one day, you’ll pay that home off and it’ll be yours, rather than continuing to pay rent for the rest of your life.
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