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There was a time when owning your own home was as much an investment as a way to put down roots. But if you wanted to make a quick profit it was the done thing to sell up and move on, to re-invest in a new property often in a different location. Now however, times have changed due to a probable slump in the housing market, say some. It is predicted that national home prices will decline in 2007, making this historically the first serious housing slump since the Great Depression. (Of course there have been several notable examples of long deep slumps in housing prices such as in Texas following the fall in oil shares in the mid 80s, New England in the late 80s and early 90s and in Southern California following the fall in Soviet Communism and subsequent slump in defense spending).
Weighed against the obvious security gained from making roots and settling down in your own home is the probable fact that it can work out more expensive to buy your property, than to rent. This is when you factor in not only such additions as closing costs, after-tax costs of mortgage interest, commissions and local taxes, but indeed the regular high maintenance costs involved with owning your own home, such as outgoings on home repairs and improvements and home insurances.
Nevertheless, there are of course financial advantages in buying. First of all, your mortgage is tax deductible, whereas renting definitely is not, as the government allows you to deduct mortgage interest and property taxes. Moreover there is a distinct advantage for those who might otherwise neglect to make important savings, in that the monthly mortgage repayment over a period of perhaps 15 or 30 years incorporates a portion that not only reduces your debt but also increases over time. You will certainly make considerable financial gains in buying your property, the only drawback being that you could experience severe losses in the case of the predicted housing slump.
Despite this however, much security and happiness is derived from owning your home. The fact is that it is your own and you do have the freedom to make those improvements and extensions, something which is not possible if you rent someone else’s property. Plus on the financial side there are, indeed, tax incentives on mortgage interest and property taxes which, again, are not available to renters. It is definitely worthwhile to own your own home, in terms of it being the place for you and your family to put down roots. Making those monthly mortgage payments means that you are contributing to your future savings, which is great for those who perhaps lack the incentive to otherwise save!
In conclusion, enjoy the security and freedom of owning your property, but don’t rely on it as a long-term investment, that will yield huge dividends. Concentrate on creating a comfortable home for your needs, but don’t regard investment in home improvement as a means to finance your retirement. Instead, it may be a better idea to invest some money in classes about financial assets as stocks and shares in thriving companies, globally, are the most likely to succeed and gains accrued in this way may be the best way forward for providing a comfortable retirement.