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.
| A F Carson Realty, 349 Bodie St, Longwood Fl 32750 |
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| Absolute Realty And Referral Group, 195 Wekiva Springs Rd Ste 102, Longwood Fl 3 More ... |
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| Absolute Realty Group, 195 Wekiva Springs Rd Ste 102, Longwood Fl 32779 |
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| Absolute Realty Management Group, 195 Wekiva Springs Rd Ste 102, Longwood Fl 327 More ... |
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| Adelissa, 2109 Cluster Branch Ct, Longwood Fl 32779 |
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| All Access Realty, 1309 Willow Springs Ct, Longwood Fl 32750 |
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| All States Realty, 403 Fox Valley Dr, Longwood Fl 32779 |
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| American Development Properties, 125 Red Cedar Dr, Longwood Fl 32779 |
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| American Way Real Estate, Po Box 917254, Longwood Fl 32791 |
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| Ark Management Services, 1712 Sunwood Dr, Longwood Fl 32779 |
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| Ark Realty, 1712 Sunwood Dr, Longwood Fl 32779 |
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| Associated Real Estate Invesment Services, 175 Sabal Palm Dr, Longwood Fl 32779 |
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| Atlantic American Group, 4048 Bermuda Grove Pl, Longwood Fl 32779 |
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| Azule Realty, 1421 Ounbrooke Loop, Longwood Fl 32779 |
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| Bateson Business Brokerage, 210 Crown Point Cir Ste 208, Longwood Fl 32779 |
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| Blackfin Realty, 97 Hickory Tree Rd, Longwood Fl 32750 |
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| Bnk Realty, 349 Bahia Cir, Longwood Fl 32750 |
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| Bourne Realty Group, 103 Hickory Dr, Longwood Fl 32779 |
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| Brotman Group, 276 Springside Rd, Longwood Fl 32779 |
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| Buckley Realty, 1942 Lost Spring Ct, Longwood Fl 32779 |
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| C S H Mini Management, 114 Highline Dr, Longwood Fl 32750 |
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| Caldwell Realty Services, 2941 W State Road 434 Ste 100, Longwood Fl 32779 |
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| Cardi Realty, 120 Forest Park Ct, Longwood Fl 32779 |
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| Cardiff Howell, 2820 Jacana Ct, Longwood Fl 32779 |
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| Cash To Close, 2401 W State Road 434 # A # 125, Longwood Fl 32779 |
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| Central Florida Business Advisors, 1217 Waverly Way, Longwood Fl 32750 |
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| Central Florida Realty Experts, 1385 W State Road 434 Ste 205, Longwood Fl 32750 |
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| Central Florida Realty Partners, 2180 W State Road 434 Ste 1110, Longwood Fl 327 More ... |
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| Cf Business Brokers, 114 Laurel Oak Dr, Longwood Fl 32779 |
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| Classic Homes, Po Box 916445, Longwood Fl 32791 |
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| Club Cortile Realty, 126 E Cumberland Cir, Longwood Fl 32779 |
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| Commercial Investment Properties Of Central Florida, Po Box 916574, Longwood Fl More ... |
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| Consensus Realty Solutions, 124 Ichabod Trl, Longwood Fl 32750 |
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| Cottages To Castles, 1660 Barton St, Longwood Fl 32750 |
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| Devinney Real Estate Group, 165 Sabal Palm Dr Ste 141, Longwood Fl 32779 |
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| Dingo Realty, 1250 W S R 434 Suite 1000, Longwood Fl 32750 |
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| Diversified Lifro Us, 221 W State Road 434, Longwood Fl 32750 |
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| Diversified Realty Holdings, 221 W State Road 434, Longwood Fl 32750 |
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| Dwell, 221 Hummingbird Ln, Longwood Fl 32779 |
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| Edwards International Realty & Financing, 2477 Alaqua Dr, Longwood Fl 32779 |
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| Executive Realty Of Florida, 296 Howard Blvd, Longwood Fl 32750 |
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| Exit J&r Global Realty, Po Box 915462, Longwood Fl 32791 |
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| Exit Real Estate Results, 2401 W State Road 434 Ste 125a, Longwood Fl 32779 |
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| Exit Real Estate Results, 2401 W State Road 434 # A # 125, Longwood Fl 32779 |
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| First Florida Realty Group, 2180 W State Road 434 Ste 5000, Longwood Fl 32779 |
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| Florida Real Estate Properties, 2484 W State Road 434 Ste 204, Longwood Fl 32779 |
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| Full Circle Real Estate & Management, 400 Overstreet Ave, Longwood Fl 32750 |
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| Future Holdings, Po Box 917359, Longwood Fl 32791 |
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| Gibraltar Real Estate Services, 2350 S Us 17-92 Suite 1000, Longwood Fl 32750 |
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| Globecore, 1075 Florida Central Pkwy, Longwood Fl 32750 |
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| Grant Properties, 240 Spanish Oak Trl, Longwood Fl 32779 |
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| Greater Orlando Referral Realty, 931 Wekiva Springs Rd Ste 104, Longwood Fl 3277 More ... |
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| H & H Realty, 2901 W State Road 434 Ste 131, Longwood Fl 32779 |
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| H D Realty, 1499 Highway 434 W, Longwood Fl 32750 |
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| Hatchette Investment Properties, 3222 Winding Pine Trl, Longwood Fl 32779 |
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| Hd Realty, 1499 W State Road 434, Longwood Fl 32750 |
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| Infinity Real Estate Group, 536 Whisperwood Dr, Longwood Fl 32779 |
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| Infinity Realty, 2671 Jennifer Hope Blvd, Longwood Fl 32779 |
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| Investorlando Realty, 300 S Ronald Reagan Blvd, Longwood Fl 32750 |
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| Ioa Real Estate Advisory Group, 1855 W State Road 434, Longwood Fl 32750 |
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| Iq Realty, 714 Savage Ct, Longwood Fl 32750 |
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| J Max Properties, 369 Cypress Landing Dr, Longwood Fl 32779 |
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| Jefferson Property Management, 172 W Warren Ave, Longwood Fl 32750 |
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| Kestner Consulting, 203 S Sweetwater Blvd, Longwood Fl 32779 |
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| Keystone Realty, 517 Fox Hunt Cir, Longwood Fl 32750 |
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| Kim Shankling Realty, 976 Fl Central Pkwy Ste 108, Longwood Fl 32750 |
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| Kingsland And Associates, 501 Florida Central Pkwy Unit 522008, Longwood Fl 3275 More ... |
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| Kjg, 165 Sabal Palm Dr Ste 141, Longwood Fl 32779 |
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| Land Sales Of Central Florida, 951 Sweetwater Club Blvd, Longwood Fl 32779 |
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| Locator Realty, 1734 Markham Glen Cir, Longwood Fl 32779 |
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| Lundberg Properties, 200 S Sweetwater Blvd, Longwood Fl 32779 |
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| M & M Referral Realty, 740 Fla Central Pkwy Suite 1020, Longwood Fl 32750 |
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| Magic Properties & Investment, 280 S Ronald Reagan Blvd, Longwood Fl 32750 |
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| Margaux Realty, 400 Magnolia Oak Ct, Longwood Fl 32779 |
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| Marmac Land And Development Co., 530 S Reagan Blvd Ste 100, Longwood Fl 32750 |
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| Mcneely Realty, 126 E Cumberland Cir, Longwood Fl 32779 |
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| Members Realty, 540 S Longview Pl, Longwood Fl 32779 |
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| Mls Select Realty, 1075 Cheltanham Ct, Longwood Fl 32750 |
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| Morgan Fraiser Properties, 2180 Terrace Blvd, Longwood Fl 32779 |
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| My Property Manager, 931 Wekiva Springs Rd Ste 108, Longwood Fl 32779 |
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| National Referral & Relocation Realty, 500 Sweetwater Club Blvd, Longwood Fl 327 More ... |
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| Net Realty Group, 123 Foxridge Run, Longwood Fl 32750 |
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| New Venture Realty, 201 Bridle Path, Longwood Fl 32779 |
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| Newpoint Properties, 105 Sand Pine Ln, Longwood Fl 32779 |
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| Nexgen Real Estate, 3274 Regal Crest Dr, Longwood Fl 32779 |
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| Orlando Fine Properties, 3358 Horseshoe Bend Ct, Longwood Fl 32779 |
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| Park Place Realty Associates, 1230 Commerce Park Dr Ste 108, Longwood Fl 32779 |
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| Park Place Realty Network, 1230 Commerce Park Dr Ste 108, Longwood Fl 32779 |
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| Peggy De Laura, 2656 Bent Hickory Cir, Longwood Fl 32779 |
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| Perko Pro Team, 851 Hobson St, Longwood Fl 32750 |
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| Perlman Group, 206 Green Lake Cir, Longwood Fl 32779 |
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| Pieters Real Estate Services, 3191 Deer Chase Run, Longwood Fl 32779 |
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| Practice, 120 Stone Post Rd, Longwood Fl 32779 |
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| Prefer 1 Real Estate, 133 W Bay Ave, Longwood Fl 32750 |
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| Prestige Property Shop, 103 Colonial Ln, Longwood Fl 32750 |
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| Property Manager Guys, 97 Hickory Tree Rd, Longwood Fl 32750 |
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| Prospect Realty, 477 Commerce Way Ste 101, Longwood Fl 32750 |
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| Quadrant Group, 172 W Warren Ave, Longwood Fl 32750 |
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| Real Estate Hunters, Po Box 915211, Longwood Fl 32791 |
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| Real Estate Professionals Southeast, 740 Fl Central Pkwy Ste 1020, Longwood Fl 3 More ... |
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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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