6 Reasons Why You Should Not Buy A Home
Owning a home may be the epitome of the American dream, but it’s not engraved in stone! So, if you’ve been drawing attention to the idea of giving up home ownership, then by all means go for it. However, given that home ownership is considered the hallmark of wealth, giving up is about to bring you many arguments. Individuals in your circle may even criticize. But regardless of what the larger population thinks, here are never good reasons not to buy a home. Ownership Costs Do Lifetime Advocates for Home Ownership often argue that paying rent is expensive, but home ownership is just as expensive. The costs of home ownership do not end with that initial payment. It comes with lifelong costs, which, compared to renting, will create a dent in your finances and eliminate your peace of mind. For example, utility bills like electricity and water are inevitable and have to be paid monthly. According to Zillow, these bills alone cost homeowners between $ 2,300 and $ 4,600 annually. Add recurring costs like insulation, heating and cooling maintenance costs, homeowners insurance, property taxes, HOA fees, mortgage payments, and yard maintenance, and chances are you’ll spend more each year than a living renter in a house similar to yours. What’s more, there’s no opt-out. Once you buy a home, you commit to these costs unless you decide to sell it. On the other hand, when you lease or rent a home, you can always opt out. For example, when times get tough, you can always move to income-based apartments until you’re back on your feet again. Real Estate Investment Home individuals do not try to convince you that your home is an investment. While there is some truth in this, buying a house as your main residence is not the same as buying one for rent or resale. Why? Well, when you buy a home for real estate, it brings you a return on investment. For example, when you buy a condo and rent or lease it, it offers you an investment return at least monthly or every six months based on the terms of your agreement with your tenant. But when you buy a home to live in, you will have invested, but you will not get any return. If anything, you’ll be the one who puts money into it through maintenance, mortgage payments, and all the other costs mentioned earlier. Also, a house can never be an investment if you do not intend to sell at any time. What makes an investment an investment is your control over its ownership. That is, real estate investment is referred to so you can buy it when its value is low and sell it when the value is high, making a profit. But your main residence is different because you can only wake up one morning and decide to sell it unless you are hard pressed for cash, which in most cases means you will take any offer that results in losses. Also, when you sign the home purchase agreement, your money is automatically locked down, and the only way you can get it back is by selling it or taking out a home equity loan. When you rent or lease, you release your cash, which you can use to invest in opportunities that grow your wealth. Sure, you could argue that rent is expensive, but this is not a good enough reason to buy a home since there are plenty of modern, well-equipped, low-income apartments that will help you keep costs’ n low. Housing Values Are Not Always High It is true that a house increases in value as time goes by. Because of inflation, a house bought for $ 100,000 is now worth over $ 600,000. That means selling it will bring you a good profit. However, keep in mind that the real estate market is extremely volatile. The value of your home could be high now, then it could fall steeply due to a crash in the real estate market and / or other external factors. For example, during the great financial recession of 2007-2009, real estate market values fell sharply, which saw huge losses for sellers. Current listing values plummeted from $ 7.1 million to $ 4.1 million, marking a 25% drop in the value of homes sold during this period. What does this have to do with buying a home? Well, you might buy a home expecting it to increase in value, but instead, find that its value is incredibly low when you really need to sell it. The result? You end up selling it at a loss. Keep in mind that some factors are beyond your control. For example, the real estate market may not collapse, but due to other components such as increased crime, the value of homes in the neighborhood in which you bought your home is falling. Such an event will make it virtually impossible, if not, to find a buyer willing to take it off your hands, even at a purchase price. In other words, unless you have a magical crystal ball, there’s no telling what will happen next with the general real estate market, or your local market. So if you are buying a home now with hopes that its value will increase in the future, then it is best not to buy one as you may be extremely disappointed. Tie You Down Unless you’re rich and can afford to buy a home in different parts of the country, home ownership ties you into one location. If you get a great job or an entrepreneurship opportunity, you can’t just pack and go. First, you have to put your home on the market and find a Realtor to help you sell it. You also have to worry about market values, and as you’re in a hurry to move to your next location, you’re likely to sell to the first buyer because you don’t have time to wait for better offers . But when you rent, all you have to do is pack and go. Even if you are not moving, buying a home automatically means you will have to deal with the community around you for the rest of your life, especially if you are not planning to sell it. For example, even if you don’t like your neighbors, you will have no choice but to learn to put up with them. When you rent and do not like your neighbors, the option to walk away is always viable. Home Ownership is Not for Everyone Everyone is not cut out for home ownership. It comes with responsibilities that some people do not have the skin to handle. For example, when you are buying a home, especially in a HOA community, you need to make sure the yard is well maintained, clean gutters, repaint your exterior regularly, and other similar tasks. Not everyone is cut off for that level of responsibility, and if this describes you, then never buy a home. Home Ownership Does Not Define YouOwning that a modern condo is great, but you can still enjoy living in it without having to deal with the stress of ownership by simply leasing. Home ownership does not in any way define your success. So, if you’ve never wanted a home, don’t buy it because your peers own multiple houses. After all, home ownership leaves little to be desired. See more from Benzinga * Click here to get options trades from Benzinga * Amazon Opens Three San Antonio Facilities * The Psychology Behind the M1 Finance Platform And Its Focus on Benzinga 2020 Financial Wellbeing (C) 2020. com. Benzinga does not provide investment advice. All rights reserved.