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.
| 1 First Choice Realty, 1441 Creighton Rd, Pensacola Fl 32504 |
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| 2 Paradise Realty, 13260 Sorrento Rd, Pensacola Fl 32507 |
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| A Able Realty Of Northwest Florida, 1810 Creighton Rd, Pensacola Fl 32504 |
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| A Red Door Property, 1020 N Reus St, Pensacola Fl 32501 |
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| Adams Homes Realty, 5508 N W St Ste B, Pensacola Fl 32505 |
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| Adoor Properties, 401 E Chase St Ste 100, Pensacola Fl 32502 |
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| Agency, 5705 N Davis Hwy, Pensacola Fl 32503 |
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| American Realty Of Pensacola, 500 S Fairfield Dr, Pensacola Fl 32506 |
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| Approved Properties Limited Liability Company, 5705 N Davis Hwy, Pensacola Fl 32 More ... |
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| Aquatic Realty, 14508 Perdido Key Dr, Pensacola Fl 32507 |
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| Assist 2 Sell, 2003 N 9th Ave, Pensacola Fl 32503 |
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| Audie Street Real Estate, 1313 Creighton Rd, Pensacola Fl 32504 |
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| B W Properties, 38 S Blue Angel Pkwy # 234, Pensacola Fl 32506 |
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| Baars Real Estate Services, 4771 Bayou Blvd # 283, Pensacola Fl 32503 |
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| Bayfront Realty Group, 260 S Tarragona St Ste 240, Pensacola Fl 32502 |
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| Beach Ball Realty, 901 E La Rua St, Pensacola Fl 32501 |
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| Beck Partner Cre, 151 W Main St Ste 200, Pensacola Fl 32502 |
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| Beck Partners Cre, 151 W Main St Ste 200, Pensacola Fl 32502 |
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| Better Homes Realty, 7001 Lindskog St, Pensacola Fl 32506 |
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| Beumer Realty, 12510 Gulf Beach Hwy, Pensacola Fl 32507 |
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| Boyleston Realty, 31 W Garden St Ste 205, Pensacola Fl 32502 |
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| Brantley & Associates Real Estate Appraisal Corporation, 100 N Spring St, Pensac More ... |
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| Brock Properties, 1141 Coila St, Pensacola Fl 32504 |
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| Business Brokers South, 6706 Plantation Rd Ste A, Pensacola Fl 32504 |
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| Butler Land And Timber Company, 30 S 3rd St Ste B, Pensacola Fl 32507 |
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| Butler Properties, 3044 E Kingsfield Rd, Pensacola Fl 32514 |
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| C & M Referral, 2107 Airport Blvd, Pensacola Fl 32504 |
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| Care Realty Group, Po Box 4250, Pensacola Fl 32507 |
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| Catalyst Cre, Po Box 13273, Pensacola Fl 32591 |
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| Centre Group Properties, 4400 Bayou Blvd Ste 35, Pensacola Fl 32503 |
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| Century 21 Amerisouth Realty, 2400 W Nine Mile Rd, Pensacola Fl 32534 |
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| Charles D Hoffman, 4018 Indigo Dr, Pensacola Fl 32507 |
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| Charles Stallions Real Estate Services, 139 E Burgess Rd, Pensacola Fl 32503 |
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| Classic Homes Realty And Development, 6833 Cedar Ridge Dr, Pensacola Fl 32526 |
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| Coastal Living Property Sales, 10099 Nelle Ave Unit 406, Pensacola Fl 32507 |
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| Coastal Living Realty & Associates, 105 E Gregory Sq Ste F, Pensacola Fl 32502 |
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| Coastal Realty Experts, 811 N Reus St, Pensacola Fl 32501 |
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| Coastal Waters Realty, 6200 Don Carlos Dr, Pensacola Fl 32507 |
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| Coastal Zone Properties, 1572 Newcastle Way, Pensacola Fl 32534 |
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| Coleman Corporation Of Northwest Florida, 742 Boulder Creek Dr, Pensacola Fl 325 More ... |
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| Condominium Management Services, Po Box 10977, Pensacola Fl 32524 |
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| Connell & Manziek Realty, 2107 Airport Blvd, Pensacola Fl 32504 |
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| Connell Realty & Development, 2107 Airport Blvd, Pensacola Fl 32504 |
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| Contrax Real Estate, 7656 Charter Oaks Dr, Pensacola Fl 32514 |
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| Creative Property Management Of Northwest Florida, Po Box 34065, Pensacola Fl 32 More ... |
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| Custom Property Management Of Nwfl, 1144 W Nine Mile Rd, Pensacola Fl 32534 |
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| D S J Property Company, 600 Univ Ofc Blvd Ste 10a, Pensacola Fl 32504 |
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| Distinctive Group, 7589 W Highway 98, Pensacola Fl 32506 |
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| Dixie Marketing Services, 2235 N 61st Ave, Pensacola Fl 32506 |
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| Donovan Realty, 223 E Government St, Pensacola Fl 32502 |
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| Durney Properties, 2801 Bayou Blvd, Pensacola Fl 32503 |
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| Eden Owner's Association, 16281 Perdido Key Dr, Pensacola Fl 32507 |
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| Elliott Properties, 3291 Wilde Lake Blvd, Pensacola Fl 32526 |
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| Emerald Coast Choice Realty, 4214 Bonway Dr, Pensacola Fl 32504 |
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| Era Emerald Coast Realty, 240 E Intendencia St, Pensacola Fl 32502 |
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| Era Legacy Realty Richardson, 101 E Garden St, Pensacola Fl 32502 |
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| Eric Gleaton Realty, 102 E. Nine Mile Rd., Pensacola Fl 32534 |
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| Escambia County Properties, Po Box 3764, Pensacola Fl 32516 |
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| Exit Realty N F I, 7139 N 9th Ave, Pensacola Fl 32504 |
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| F I G Referral Company, 800 Langley Ave, Pensacola Fl 32504 |
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| F Y S B O, 1618 Creighton Rd, Pensacola Fl 32504 |
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| First Class Realty, 4212 Lynn Ora Dr, Pensacola Fl 32504 |
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| Flag Realty, 3000 Langley Ave Ste 402, Pensacola Fl 32504 |
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| Florida Land And Investments, Po Box 1392, Pensacola Fl 32591 |
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| Floridas Top Properties, 24 W Chase St, Pensacola Fl 32502 |
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| Fowler Property Management, 705 W Romana St, Pensacola Fl 32502 |
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| Garnet Realty, 1212 Creighton Rd, Pensacola Fl 32504 |
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| Gfp Realty, Po Box 34466, Pensacola Fl 32507 |
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| Gibson And Associates, 222 E Intendencia St, Pensacola Fl 32502 |
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| Global United Properties, 701 N Navy Blvd Ste 1, Pensacola Fl 32507 |
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| Gooden Homes, 4400 Bayou Blvd Ste 40, Pensacola Fl 32503 |
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| Grand Points Realty, 511 E Government St, Pensacola Fl 32502 |
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| Granger Properties, 120 E Main St Ste D, Pensacola Fl 32502 |
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| Grc Property Management, 4710 N W St, Pensacola Fl 32505 |
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| Griffing Company, Po Box 12684, Pensacola Fl 32591 |
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| Gulf Breeze Realty, 1000 Scenic Hwy, Pensacola Fl 32503 |
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| Gulf Coast Home Experts, 926 E Cervantes St, Pensacola Fl 32501 |
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| Gulf Coast Pathway Properties, 321 N De Villiers St Ste 200, Pensacola Fl 32501 |
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| Gulf Coast Property Management Co, 1101 N 9th Ave, Pensacola Fl 32501 |
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| Gulf Coast Real Estate Brokers, 3298 Summit Blvd Ste 7 # 8a, Pensacola Fl 32503 |
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| Gulf Coast Real Estate Management, 926 E Cervantes St Ste B, Pensacola Fl 32501 |
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| Gulf Emerald Coast Property Management And Realty Co, 3902 N 9th Ave Ste 7, Pens More ... |
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| Gulf Real Estate Group, 6990 Pine Forest Rd, Pensacola Fl 32526 |
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| Gunther Properties, 503 E Government St, Pensacola Fl 32502 |
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| Hank Holland Property Management, 110 Beverly Pkwy, Pensacola Fl 32505 |
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| Hess Realty Group, 1312 E Cervantes St, Pensacola Fl 32501 |
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| Hidden Gem Realty, 8210 Lillian Hwy, Pensacola Fl 32506 |
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| Hoard Properties, 9460 Kainui Dr, Pensacola Fl 32526 |
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| Hoffman & Associates Pa, 1550 Creighton Rd Ste 4, Pensacola Fl 32504 |
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| Holly Lovett, 8757 Scenic Hwy, Pensacola Fl 32514 |
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| Home Equity Builders, 4400 Bayou Blvd Ste 58a, Pensacola Fl 32503 |
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| Horizon Realty Of The Gulf Coast, 1335 Creighton Rd, Pensacola Fl 32504 |
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| Innerarity Realty, 13118 Sorrento Rd Ste A, Pensacola Fl 32507 |
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| Insight Realty Services, 9455 Wanda Dr, Pensacola Fl 32514 |
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| J G Buehler & Co, 5121 N 12th Ave, Pensacola Fl 32504 |
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| J Stewart Realty Company, Po Box 9221, Pensacola Fl 32513 |
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| Jayne Ward Realty, 5480 N Shore Rd, Pensacola Fl 32507 |
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| Joetta Newman Auction & Realty Company, 4740 Peacock Dr, Pensacola Fl 32504 |
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| Jrc Realty, 14067 Waterview Dr, Pensacola Fl 32507 |
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| Keller Williams Realty Gulf Coast, 800 Langley Ave, Pensacola Fl 32504 |
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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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