Is buying always best?

Sometimes we have to accept the fact that times are changing, and not always for the better. What was once the American way, in fact the American Dream, may not be a reality anymore. It may be sad, and it may be regrettable, but you have to do what is best for you and your family given the reality of the times. One of the reasons why home ownership always made so much financial sense for most people was the fact that it was the foundational instrument of wealth building for ordinary people. Why is this? Because home values just about always increased over time, sometimes dramatically.

So even though you had to pay interest, taxes, and insurance, and maintain and repair anything that went wrong, the typical rate of appreciation would offset these losses. In addition, as long as your mortgage payment was somewhere in the vicinity of what you would be paying for rent anyway, any inroads that you were making into the principal would be better than the nothing you get when you pay rent.

However, all of this is simply not true anymore. The prices of homes are going down, but it is hard to say that they have reached rock bottom, so there is no reason to expect that your home is going to appreciate in value. Ask yourself the question: if I buy a house right now, under what circumstances would it go up in value? The answer to this question is simply a matter of supply and demand. Do you think that people will be competing to buy this home you are considering in the coming years, and in turn ratchet up its value? If you do, then perhaps you should buy. But if you don’t, it may be best to continue renting until and unless you feel confident that people will be trying to outbid one another for your property should you decide to sell it.