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Is Owning a Home Always your Best Investment?

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One of my clients showed me an email she received from a real estate agent.  In that email, it stated:   “Owning a home is the best investment you can make.  You live rent-free in an asset that appreciates over time.

Looking at this I wanted to express my concerns or questions which need to be considered before you accept this statement to be true:

  • Is the price right?   If you buy when the market high for purchasing a home, statement is  false
  • Are the payments affordable over time?  If you have  lower income in the future, statement is false.
  • Will this asset appreciate?  If it does not, statement is false.
  • Will the asset depreciate in value and you cannot sell for more than you paid?   statement is false.
  • Is the condition of the home such that substantial repairs are or will be needed.  Costs now or in the future may be not be affordable based upon your budget?    statement is false.
  • Is the monthly payment too high and requires you to buy your essentials on credit cards?  statement is false.
  • Is property in a flood zone?   statement could be false based upon flood insurance and lower resale value.
  • Does the property have an oil tank and contamination?  statement is false.

Remember that each purchase of a home is a substantial investment and you need to look at the whole picture before you take this statement to heart.

I have seen many of my clients in a position where they have no equity after paying their mortgage for years.   They would not agree with the statement at all.