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 Real Florida Future, 2313 Louella Ave, Panama City Fl 32405 |
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| Advisors Realty Panama City, 7911 Thomas Dr, Panama City Fl 32408 |
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| American Homeland Realty, 11615 Poston Rd, Panama City Fl 32404 |
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| Azure Real Estate, 700 Monty Cir, Panama City Fl 32405 |
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| Bay Coastal Realty, Po Box 1554, Panama City Fl 32402 |
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| Bay Homes Real Estate, 926 Jenks Ave, Panama City Fl 32401 |
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| Bay Point Real Estate Company, Po Box 28239, Panama City Fl 32411 |
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| Bay Referral Services, 2306 Cochran Ave, Panama City Fl 32408 |
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| Bay Town Realty, 1926 W 23rd St, Panama City Fl 32405 |
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| Bay West Realty And Development, Po Box 15368, Panama City Fl 32406 |
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| Beach Property Management And Sales, Po Box 18143, Panama City Fl 32417 |
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| Beach Time Realty, 143 Palm Grove Blvd, Panama City Fl 32408 |
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| Blue Coral Real Estate Group, Po Box 27192, Panama City Fl 32411 |
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| Blue Heron Realty, 429 S Tyndall Pkwy Ste F, Panama City Fl 32404 |
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| Bluewater Commercial, 430 W 5th St Ste 400, Panama City Fl 32401 |
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| Bluewater Realty Of Bay County, Po Box 9595, Panama City Fl 32417 |
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| Bodiford Realty, Po Box 15105, Panama City Fl 32406 |
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| Broker To Broker Referrals, 2551 Jenks Ave, Panama City Fl 32405 |
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| Capital Management And Realty, 1816 Thomas Dr, Panama City Fl 32408 |
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| Carroll Realty Property Management, 834 Grace Ave, Panama City Fl 32401 |
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| Century 21 Commander Realty, 2708 M L King Jr Blvd, Panama City Fl 32405 |
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| Century 21 Ryan Realty, 8212 Thomas Dr, Panama City Fl 32408 |
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| Chandler & Associates Of Panama City, 11 W 23rd St Bldg D, Panama City Fl 32405 |
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| Charles Robert Schaffer, Po Box 15729, Panama City Fl 32406 |
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| Citistar Realty, 8235 Grand Bay Blvd, Panama City Fl 32408 |
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| Coastal Real Estate Group, 6618 Gulf Dr, Panama City Fl 32408 |
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| Coldwell Banker Carroll Realty, 2551 Jenks Ave, Panama City Fl 32405 |
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| Commodore Sales & Rental Corporation, 4715 Thomas Dr, Panama City Fl 32408 |
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| Condo Sales Realty, 2804 Stanford Rd, Panama City Fl 32405 |
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| Counts Oakes Resort Properties, 2104 Thomas Dr, Panama City Fl 32408 |
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| Counts Real Estate Group, 2104 Thomas Dr, Panama City Fl 32408 |
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| Dayco Realty, 438 N Cove Blvd, Panama City Fl 32401 |
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| Dwight Hicks, 315 Harrison Ave, Panama City Fl 32401 |
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| Edgewater Beach Realty, Po Box 9850, Panama City Fl 32417 |
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| Edwards & Co Realty, 3111 Delwood Beach Rd, Panama City Fl 32408 |
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| Emerald View Real Estate, Po Box 9418, Panama City Fl 32417 |
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| Emerald-coast-real-estate, 420 Churchwell Dr Unit 19592, Panama City Fl 32417 |
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| Era Neubauer Commercial, 740 S Tyndall Pkwy, Panama City Fl 32404 |
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| First Real Estate Group, Po Box 27576, Panama City Fl 32411 |
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| Florida Moves, 740 S Tyndall Pkwy, Panama City Fl 32404 |
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| Florida Real Estate Investor Services, 4117 Lookout St Apt 6, Panama City Fl 324 More ... |
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| Fm Realty Advisors, Po Box 28193, Panama City Fl 32411 |
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| Full Sail Realty Of Northwest Florida, Po Box 16014, Panama City Fl 32406 |
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| Fuller Property Services, 5116 Gulf Dr, Panama City Fl 32408 |
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| Funquest, Po Box 18074, Panama City Fl 32417 |
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| Giles Appraisal Group, 122 E 4th St, Panama City Fl 32401 |
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| Gulf Coast Eagle Investments, 1600 Marina Bay Dr Unit 608, Panama City Fl 32409 |
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| Gulf Coast Landscaping & Concrete, Po Box 18108, Panama City Fl 32417 |
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| Gulfview Properties, 222 Hidden Pines Dr, Panama City Fl 32408 |
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| Hope Realty Of Bay County, 215 W 11th St, Panama City Fl 32401 |
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| Investors Advantage Real Estate, 2916 Briarcliff Rd, Panama City Fl 32405 |
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| J Scott Realty, 6513 Bayline Dr, Panama City Fl 32404 |
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| Jgs Beachfront Condo Rentals, 1016 Thomas Dr # 104, Panama City Fl 32408 |
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| Jim Free Realty, 8101 Thomas Dr, Panama City Fl 32408 |
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| Joni's Beach Rentals, 312 Hidden Island Dr, Panama City Fl 32408 |
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| Katherine Riley Realty, 1838 Frankford Ave, Panama City Fl 32405 |
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| Land's End Realty, 3233 Magnolia Islands Blvd, Panama City Fl 32408 |
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| Latitudes Realty, Po Box 15819, Panama City Fl 32406 |
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| Leeshore Realty, 1016 Thomas Dr # 310, Panama City Fl 32408 |
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| Lifes A Beach Real Estate, 8208 Grand Palm Blvd, Panama City Fl 32408 |
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| Lighthouse Realty Of Bay County, 834 Grace Ave, Panama City Fl 32401 |
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| Livethegulfcoast.com, 455 Harrison Ave Ste C, Panama City Fl 32401 |
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| Longleaf Real Estate & Development, 7640 Kingswood Rd, Panama City Fl 32409 |
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| Maverick Rep's, 4321 Magnolia Beach Rd, Panama City Fl 32408 |
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| Mckenzie Real Estate, 1106 Kristanna Dr, Panama City Fl 32405 |
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| Nations Real Estate, Po Box 15849, Panama City Fl 32406 |
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| Nautilus Realty & Management, 1405 W 15th St Ste D, Panama City Fl 32401 |
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| Neubauer Real Estate, 740 S Tyndall Pkwy, Panama City Fl 32404 |
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| Nexus Realty, Po Box 517, Panama City Fl 32402 |
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| Northwest Florida Realty, 3219 Highway 389, Panama City Fl 32405 |
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| Northwest Florida Realty, 5249 Stewart Dr, Panama City Fl 32404 |
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| O'keefe & Wainwright, 421 W Beach Dr, Panama City Fl 32401 |
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| Overstreet Realty, 747 Harrison Ave, Panama City Fl 32401 |
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| Palm Realty Of Pcb Incorporated, Po Box 18412, Panama City Fl 32417 |
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| Panhandle Real Estate, 2611 W 23rd St Ste C, Panama City Fl 32405 |
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| Pcb Life Management Company, Po Box 28264, Panama City Fl 32411 |
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| Piney-z Development, 1002 W 23rd St Ste 400, Panama City Fl 32405 |
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| Premier Coastal, 7014 Thomas Dr, Panama City Fl 32408 |
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| Premier Properties Of Bay County, 515 E 5th Ct, Panama City Fl 32401 |
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| Priority 1st Realty, 2947 Woodcrest Dr, Panama City Fl 32405 |
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| Prothro Real Estate And Associates, Po Box 9881, Panama City Fl 32417 |
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| Rainier Properties, Po Box 18349, Panama City Fl 32417 |
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| Realty Check Real Estate Services, 2111 E 3rd St, Panama City Fl 32401 |
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| Realty One Of Northwest Florida, 8200 Palm Cove Blvd, Panama City Fl 32408 |
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| Realty Services Inc Of The South, 415 N Cove Blvd, Panama City Fl 32401 |
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| Resource Realty Group, 2101 Northside Dr Ste 104, Panama City Fl 32405 |
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| Royal American Hospitality, 9400 S Thomas Dr, Panama City Fl 32408 |
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| Royal American Management, 1002 W 23rd St Ste 400, Panama City Fl 32405 |
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| Royal American Real Estate, 1002 W 23rd St Ste 400, Panama City Fl 32405 |
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| Ryan Properties Broker To Broker, 8212 Thomas Dr, Panama City Fl 32408 |
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| Sand Dollar Beach Real Estate Company, Po Box 9753, Panama City Fl 32417 |
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| Sandcastle Realty Services, 6530 Thomas Dr, Panama City Fl 32408 |
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| Scaperotta Real Estate, Po Box 19215, Panama City Fl 32417 |
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| Sea Breeze Realty Of Panama City Beach, Po Box 27294, Panama City Fl 32411 |
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| Seltzer Real Estate, Po Box 27431, Panama City Fl 32411 |
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| Shimmering Sands Referrals, 700 Monty Cir, Panama City Fl 32405 |
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| Shorelines Real Estate, 609 E 4th Ct, Panama City Fl 32401 |
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| Sims Resort Realty, 4341 Thomas Dr # G-19, Panama City Fl 32408 |
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| Site Solutions, 3107 W 27th St, Panama City Fl 32405 |
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| Southeast Commercial Realty And Southeast Living Realty, 1022 W 23rd St Ste 660, 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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