It seems nothing can stop Americans from wanting to buy their own homes. It’s almost as if the credit crisis didn’t happen, even though not too long ago we were bombarded daily with stories about crashing prices, underwater mortgages and home foreclosures. It was an American nightmare, not the American Dream.
But if you think about the emotional and economic reasons people want to buy instead of rent, it’s not so hard to understand. As a financial advisor, I meet many potential first-time homebuyers who cite these reasons for wanting to buy:
- “Why should I pay a landlord when I can put the money toward building equity in something myself?”
- “Paying rent is like throwing money away.”
- “I don’t trust the stock market. I’d rather put money in real estate.”
- “Renting feels like a temporary situation. I want to put down roots and nest.”
- “I want to be able to remodel my home in any way I want, with no restrictions from landlords.”
What I usually do at this point in the conversation is a back-of-the-envelope analysis of what it would look like for my client to buy a home. The key components of the analysis involve money saved and money earned. Continue Reading…