Should I buy or rent until the real estate market rebounds
I'm a buyer and I'll tell you why. The average annual rate of appreciation for homes in the United States is 6.23%, going back over 40 years. The lowest in the union was West Virginia with an average annual rate of return of 3.97%. The best state for appreciation was California at 9.36%. Those rates of return are based on people paying cash for those homes. Most people these days do not pay cash for their homes. They get a mortgage. Some people would say that it's because most people don't have the money. While that's true, if you were to interview people who do have the money to pay cash for their home, they seldom do. The reason is, people who could pay cash for a home understand the value of money along with the value of using someone else's money. In fact, if you put 20% down on your home purchase, let's say 30 or 40 years ago, your average annual rate of return would have been well over 20%. That also does not include any tax advantages of owning a home. This is because your rate of return is based on the amount of money you put into that home when you bought it. Just as when you buy a stock or any other investment your rate of return is based on the money you put into that investment.
One of the best things about a home is that everybody needs a place to live. Whether you are paying rent to live in an apartment or paying a mortgage, you still need a roof over your head. So simply consider the long-term prospects of paying rent to someone else or paying a mortgage for yourself!
MP3 recorded by the author
Donald W. LaPlume, Jr.
President & CEO
Sensible Mortgage Solutions Corporation
603-543-3700