Enough with the gloom and doom about home ownership. Sure, maybe there’s more pain to come in the housing market. But there are still some very real, concrete arguments for owning a home versus renting. So here are 10 reasons why it’s good to buy a house.
1. You can get a good deal.
This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases are long past. Prices have gone down a long way – about 30% from their peak, according to Standard & Poor’s Case‑Shiller Index. Yes, it’s mixed across the country. Will prices fall further? Sure, they could. But you’ll never catch the bottom. And it doesn’t really matter much in the long haul.
2. Mortgages are cheap.
Many people can get a 30-year loan for around 4.3%. What’s not to like? These are some of the lowest rates on record. As recently as two years ago, they were about 6.3%. That drop slashes your monthly rate by about a fifth. If inflation picks up, you won’t see those rates again in your lifetime. And if we get deflation and rates fall further, you can refi.
3. You’ll save on taxes.
You can deduct the mortgage interest from your income taxes. And you’ll get a tax break on the capital gains when you sell. Sure, you’ll need to do the 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 many 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 bathroom you want, or move the walls or build an extension. For renters, these types of changes are often impossible.
5. You’ll get a better home.
In many parts of the country, it can be really hard to get a good rental. All the best places are sold as condos. 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 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 getrich. But if the economy does surprise us all and start booming, sooner or later real estate will head up again, too.
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 will still make sense. But will you save the $400 in the future? A lot of people won’t. Once again, you’ll 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.
9. There is a lot to choose from.
There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. This means great choice, as well as great prices.
10. Sooner or later, the market will clear.
Demands and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out.