In today's economic climate, I think many homeowners would say that their homes own them. The inability to sell their home is like a noose around their neck. They feel trapped and unable to move on. They are anchored to a particular home and community which may no longer fit their needs or budget. 

Home ownership is said to be The American Dream. For many, it has become The American Nightmare. 

I remember back to those carefree early days of my marriage before we jumped into home ownership. How easy life was! No yard to mow, snow to shovel, no worries about the roof leaking or basement flooding. No windows to replace, no property taxes to pay, no bushes that need trimming. But of course, like many young couples, we dreamed of owning our own home and were so excited when we were finally able to do so.

After all, there are many benefits to owning your own home. As a young bride, I was focused mostly on being able to paint and decorate to my heart's desire. Beyond this pride of ownership (your home truly is your castle!); there are also considerable tax benefits and the ability to build your own equity instead of paying your landlord's mortgage for him. You also gain a sense of belonging to the community and the security of knowing that you can't be kicked out by a landlord at a moment's notice.

All of this comes at a price, especially in today's market.

Home ownership is, I believe, one of the keys to long term wealth. Generally speaking, it has always been seen as a way to increase your wealth as your home gains value and you build equity. Now is widely regarded as an excellent time to purchase because houses have become more affordable and interest rates are very favorable.

On the other hand, if you aren't careful, you could end up in the same boat as millions of Americans: anchored to your home, unable to sell, owning an asset that is worth less than what you paid for it. In short, you could end up being owned by your home instead of the other way around.

So should you buy your own home or continue to rent?

It all depends on your circumstances. First, you must have a very stable job. You must have a decent down payment. You must purchase in the best location you can afford. You must be willing to stay in the home you purchase for several years...long enough to ride out any additional price declines.

Historically, home values increase over the long term. Indeed, the value of our own house has increased about 20% since 2001...which is much more than we would have earned in the stock market. If the market hadn't declined, it would be worth even more. However, if we had purchased our house in 2007 and tried to sell it in 2008, we would be sitting here with a house worth less than when we purchased it. Timing is everything, isn't it?

Does home ownership still embody The American Dream? I think so. It's not a get-rich-quick strategy (as it perhaps was during the boom years) but it is still a terrific way to build long term financial security and stability. If you are considering purchasing a home in today's market, you must carefully weigh the pros and cons and consider your own personal financial situation. You should enlist the help of a trusted financial advisor, mortgage professional and real estate agent to help you decide if the right time to buy is now. 

Dream big, but be smart. 

If you are looking for a real estate agent and don't know who to trust, give me a call. As a referral agent (I'm no longer involved in the day to day real estate business), I can help match you with the perfect agent to help you buy or sell your home.