It’s possible that this recession is winding down. New house construction is on the rise, according to CNN. Perhaps people are moving out of rental units and are becoming first-time house-buyers.
However. People are still losing their houses to foreclosure. And as the article points out, many adjustable rate mortgages are about to reset. If folks were unable to refinance (because their houses have dropped in value and they owe more than its worth…) and haven’t enjoyed a substantial increase of income since they acquired their mortgage, well, they’re going to be hurting pretty soon it seems.
I do hope we, collectively, will not forget some important lessons.
In the past, people bought into the idea that a house was always a financial investment. House values always go up, or so went the common thought. They don’t “always” go up — in fact, they can tumble just like a baby learning to walk.
Buying a house can make good financial sense. If you can absolutely afford the payments and upkeep, and if having a mortgage is cheaper than renting, then go for it.
I am extremely relieved that we didn’t buy a house this year. We simply could not afford it. We could have moved some numbers around on paper to make it look doable, but I think we’d regret it.
Why get a mortgage sooner than you’re ready? Why put yourself and your family through so much stress? Is having your own walls to paint and your own little plot of land really worth it? Because if it were me, we probably wouldn’t have the money left over to paint my toenails, let alone a house.
We’re steadily adding to our house savings and with a little luck, in a year and a half or so, we should have enough money thrown together to actually consider buying without it being incredibly foolish.
It would be great if the house we buy appreciates in value, but I won’t count on it. I’ll be thankful if, when we sell it, it keeps up with inflation. It would be great not to owe on it, too. But to expect a house to turn into an amazing investment is just wishful thinking, in my humble opinion. After property taxes, repairs, mortgage interest and realtor fees, it probably is a great thing to just break even.
As baby boomers start to retire and trade their houses for condos, apartments, vacation rentals, in-laws quarters, assisted living arrangements, and uh — the grave, we’re going to see even more houses available for sale.
I’m going to speculate that in most markets, this will keep house prices in check. No ma’am, I don’t think we’ll be seeing astronomical inflation on house values again anytime soon.
Check out Mr. Tough Money Love’s article on this from earlier this summer.
I don’t know if you noticed, but I paid careful attention to use the word “house” instead of “home.” To me, home is where your family is. If you live in an apartment, trailer, mansion, bungalow or anywhere in between — if you rent or buy — your home is where you and your loved ones live, rest your heads and park your stuff.
A house is a structure. Period. I think people get caught up on the word “home” and the happy feeling it connotes, and equate its significance with having a mortgage, or being a “homeowner.” You don’t need a mortgage or a property deed to have a home.