The real estate markets have started to recover from the long recession. Many have been waiting on the sidelines, but there is no reason to wait any longer. Here are eight reasons why it’s a good time to buy a home now:
1. You can get a good deal. Though home prices have been rising, there are still good deals available in most areas of the country. There is no telling how long these good deals will last.
2. Mortgages are cheap. Rates are still hovering near record lows. What’s not to like? Historically, rates are a lot higher than today’s levels and thus homes are even more affordable now than they have been in over a decade.
3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions. The breaks are more valuable the more you earn, and the bigger your mortgage. But most people will find that these tax breaks mean owning costs them less than renting.
4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls or build an extension. For renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It was a small sign that said something big.
5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. And rents have been rising significantly for the past several years. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.
6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years.
7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But because you can purchase a larger asset with a small down payment, any gain in a home’s price is magnified. This is why the Federal Reserve Board has found that the average owner has a net worth that is several times the amount of the average renter.
8. It’s forced savings. If you can rent an apartment for $2,000 a month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity.
Source: Wall Street Journal