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.
| 850 Realty & Beach Rentals, 4042 Drifting Sand Trl, Destin Fl 32541 |
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| Adams Real Estate, Po Box 216, Destin Fl 32540 |
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| Aegean Realty, 8054 Fountains Ln, Destin Fl 32550 |
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| All County Emeral Coast Property Management, 737 Harbor Blvd Ste 7, Destin Fl 32 More ... |
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| Aquatic Resort Properties, 13330 Us Highway 98 W, Destin Fl 32550 |
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| Bay Club Of Sandestin Condominium Assoc, 120 Sandestin Blvd, Destin Fl 32541 |
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| Beach Blue Real Estate, 1577 Scenic Gulf Dr Unit 7, Destin Fl 32550 |
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| Beach Escapes Realty, 12273 Emerald Coast Pkwy Suite 107, Destin Fl 32550 |
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| Beach Quest Properties, 516 Sandy Cay Dr, Destin Fl 32550 |
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| Beachdeal Realty, 4564 Woodwind Dr, Destin Fl 32541 |
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| Beachview Property Group, 38 Kristin Cv, Destin Fl 32541 |
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| Beachy Beach Destin, 495 Grand Blvd Ste 206, Destin Fl 32550 |
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| Best Beach Vacation Rentals, 495 Grand Blvd Ste 206, Destin Fl 32550 |
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| Best Buy Realty, 4 Cahaba Ct, Destin Fl 32541 |
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| Better Homes And Gardens Real Estate Emerald Coast, 4636 Gulfstarr Dr, Destin Fl More ... |
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| Bk Olson, Po Box 1665, Destin Fl 32540 |
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| Blue Marlin Realty Group Of Nw Florida, 607 Harbor Blvd, Destin Fl 32541 |
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| Blue Mountain Beach Property Management, 4641 Gulfstarr Dr, Destin Fl 32541 |
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| Blueprint Real Estate Services, 1014 Airport Rd Unit 135, Destin Fl 32541 |
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| Bullock Realty, 4639 Gulfstarr Dr, Destin Fl 32541 |
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| Buy The Beach Real Estate, 505 Mountain Dr Unit N, Destin Fl 32541 |
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| Castle Real Estate, Po Box 1586, Destin Fl 32540 |
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| Century 21 Blue Marlin, 607 Harbor Blvd, Destin Fl 32541 |
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| Champion Realty Of The South, 52 Hidden Harbor Ln, Destin Fl 32550 |
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| Chandler & Associates, 506 Avalon Blvd, Destin Fl 32550 |
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| Coastal Realty Of Destin, 74 Aarons Reef, Destin Fl 32541 |
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| Coastal Sands Properties, Po Box 6984, Destin Fl 32550 |
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| Compass Real Estate Of Destin, 13330 Us Hwy 98 East, Destin Fl 32550 |
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| Compass Resorts, 13330 Emerald Coast Pkwy, Destin Fl 32550 |
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| Crye-leike Coastal Realty, 4495 Legendary Dr, Destin Fl 32541 |
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| Crystal Waters Realty, Po Box 6058, Destin Fl 32550 |
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| Csj Real Estate Investments, 1008 Airport Rd Ste E, Destin Fl 32541 |
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| Dale E Peterson Realty, 321 Harbor Blvd, Destin Fl 32541 |
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| Destin Beach Brokers, 4509 Luke Ave, Destin Fl 32541 |
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| Destin Beach Realty, 12889 Emerald Coast Parkway Suite 101-a, Destin Fl 32550 |
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| Destin Beach Realty 1, 12889 Emerald Coast Parkway Suite 101a, Destin Fl 32550 |
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| Destin Business Brokers, 4641 Gulfstarr Dr Ste 108, Destin Fl 32541 |
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| Destin Comforts, 4643 Paradise Isle, Destin Fl 32541 |
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| Destin Exclusive Real Estate, 1488 Island Green Ln E, Destin Fl 32550 |
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| Destin Gulfgate Owners Association, 1180 Scenic Highway 98, Destin Fl 32541 |
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| Destin Legacy Real Estate, 4503 Olde Plantation Pl, Destin Fl 32541 |
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| Destin Lifestyles Real Estate, 4059 Burning Tree Dr, Destin Fl 32541 |
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| Destin Luxury Real Estate And Rental, 9375 Emerald Coast Park Way Suite 18, Dest More ... |
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| Destin Luxury Real Estate Group, 8054 Fountains Ln, Destin Fl 32550 |
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| Destin Palms Real Estate, 1200 Scenic Gulf Dr Unit B, Destin Fl 32550 |
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| Destin Property Sales, 33 Private Ct, Destin Fl 32550 |
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| Destin Real Estate, 225 Main St Ste 20, Destin Fl 32541 |
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| Destin Real Estate Group Of Nwf, 404 Kelly Plantation Dr, Destin Fl 32541 |
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| Destin Realty, 1150 Scenic Highway 98, Destin Fl 32541 |
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| Destination Real Estate Group, 556 Seascape Dr, Destin Fl 32550 |
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| Destiny Beach Properties, 96 Dominica Ct, Destin Fl 32550 |
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| East Pass Realty, 1234 Airport Rd Ste 204, Destin Fl 32541 |
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| Ecoast, 3797 Indian Trl, Destin Fl 32541 |
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| Elouise Realty, 830 Gulf Shore Dr Unit 5036, Destin Fl 32541 |
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| Emerald Coast Business Intermediaries, 4481 Legendary Dr Ste 100, Destin Fl 3254 More ... |
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| Emerald Coast Properties, 11490 Emerald Coast Pkwy Ste 101 Suite 101, Destin Fl More ... |
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| Emerald Coast Real Estate Store, 71 Azure Pl, Destin Fl 32550 |
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| Emerald Coast Vacation Rental & Sales, 12273 Emerald Coast Parkway #110, Destin More ... |
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| Exceptional Properties, 257 Leaning Pines Loop, Destin Fl 32541 |
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| Exquisite Properties, 9375 Emerald Coast Pkwy Ste 18, Destin Fl 32550 |
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| Fillingame & Associates, 103 Antilles Cv, Destin Fl 32550 |
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| Financial World, Po Box 455, Destin Fl 32540 |
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| Five Star Living, 3999 Commons Dr W Ste A, Destin Fl 32541 |
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| Fletchersales Realty, 180 Poinciana Blvd Ste 5, Destin Fl 32550 |
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| Foundation Realty Services, Po Box 5793, Destin Fl 32540 |
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| Frangista Beach Realty, 1890 Scenic Gulf Dr, Destin Fl 32550 |
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| Gibson Beach Realty, 1 Beachside Two Ground Floor Suite 2, Destin Fl 32550 |
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| Go Destin, 4758 Bonaire Cay, Destin Fl 32541 |
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| Grand Dunes, 221 Scenic Gulf Dr, Destin Fl 32550 |
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| Gulf Coast Real Estate Services, Po Box 6878, Destin Fl 32550 |
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| Gulfshore Properties, 115 Garnet Pl, Destin Fl 32541 |
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| Hammock Bay, Po Box 1735, Destin Fl 32540 |
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| Hammock Bay Real Estate, 36164 Emerald Coast Pkwy Ste 8, Destin Fl 32541 |
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| Hargroder Real Estate Group, 793 Bayou Dr, Destin Fl 32541 |
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| Harmony Beach Realty, 3100 Scenic Highway 98, Destin Fl 32541 |
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| Hcb Advisory Group, 42 Business Centre Dr Unit 101, Destin Fl 32550 |
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| Hewitt Real Estate, 4702 Seastar Vis, Destin Fl 32541 |
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| Hightouch Realty, 4041 Indian Byu N, Destin Fl 32541 |
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| Holiday Isles Properties, 842 Hwy 98 East, Destin Fl 32541 |
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| Howard Realty, 585 Grand Blvd Ste 201, Destin Fl 32550 |
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| Hudson Homes, Po Box 5601, Destin Fl 32540 |
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| Hutchison Group, 12598 Emerald Coast Parkway Suite 201, Destin Fl 32550 |
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| Hx Decker-florida, 1577 Scenic Gulf Dr Unit 7, Destin Fl 32550 |
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| Inlet Reef Club Comdominium Owners Asso, 215 Grand Blvd Ste 200, Destin Fl 32550 |
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| Island Home Properties Co, 386 Terrapin Trce, Destin Fl 32541 |
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| J J Properties Of Pensacola, Po Box 518, Destin Fl 32540 |
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| Jpb Commercial Real Estate Advisors, 495 Grand Blvd Ste 201j, Destin Fl 32550 |
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| Jpd Investments, 1234 Airport Rd Ste 124, Destin Fl 32541 |
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| Karcher & Karcher, 3769 Misty Way, Destin Fl 32541 |
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| Keller Williams Realty Emerald Coast, 36008 Emrld Cst Pkwy Ste 201, Destin Fl 32 More ... |
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| Kent Taylor & Associates, 229 Inverrary Dr, Destin Fl 32541 |
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| Legendary Realty, 4471 Legendary Dr, Destin Fl 32541 |
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| Lisa Snuggs Real Estate Group, 539 Azalea Dr Unit 7, Destin Fl 32541 |
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| Lkm Property Management, 1014 Airport Rd Unit 105, Destin Fl 32541 |
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| Luxury Estates Auction Company, 4507 Furling Ln Unit 113, Destin Fl 32541 |
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| Mainsail Realty Company, 12870 Us 98 W, Destin Fl 32550 |
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| Meyer Realty, 69 Garnet Pl, Destin Fl 32541 |
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| My Vacation Haven, 600 Grand Blvd Ste 202, Destin Fl 32550 |
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| My Vacation Haven, 600 Grande Blvd Suite 202, Destin Fl 32550 |
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| National Real Estate Auction Group, Po Box 6334, Destin Fl 32550 |
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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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