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Should You Buy a House?

Should You Buy a House? Why a House is a Good Investment

Written by Travis Carter : Knowledge Center

Should you buy a house in 2019? When faced with the

proposition of “settling down” or commitment to a career, often one of the first steps is to find a home. So should you buy a home? Not just another house but someplace to call home. Houses are everywhere but a home defines comfort. It matches the commitments you make in your life. Whether that be family, career, children, or even education. The financial considerations are sometimes secondary to emotion.

Should You Buy a House in 2019? First, ask yourself, am I prepared to make a long term commitment to turn this house into a home. Buying a house, although it may seem complex, is rather simple compared to the responsibility to turn that house into a home. Maintenance, taxes, and insurance are just some of the additional considerations that need to be confronted.

Should You Buy a House? Is Buying a House Right For You?

The Additional Costs

When budgeting for home ownership, consider the responsibilities. Are you prepared to take care of the lawn and make.minor repairs? Are you prepared to save additional money to handle those surprises every house has. The hot water heater may need replacing or the roof may need to be replaced. Cosmetic improvements are a luxary but never forget the necessity of heat, four strong walls, and a roof. The carpet can wait. In a 24/7 world of social media and HGTV it is easy to get caught up in the dream of magnificent living quarters. You need to know that a home takes work and yet with all of the work a home is still the greatest investment you can make.

What closing costs are associated with a home purchase?

The answer can be summed up in one sentence. As the world changes around you, your mortgage will not. Of course, this assumes you have locked into a fixed-rate mortgage. Looking at your home as an investment is a great reason you should buy a house in 2019.

Inflation is the term used for increased costs as the dollar decreases in value. I am sure you have heard your parents say something like, “I remember when a gallon of milk was a dollar fifty”. There is truth to that statement and it runs much deeper than a gallon of milk. In the 1970s a newly constructed home would average $39,500. Compare that to the steep price of $300,000 or more today. The opposition to the lower cost was also lower wages. During the ’70s a good annual salary was $15,000. This may not seem like much now but comparatively speaking the income seemed acceptable given the costs of the time.

Now place yourselves in the shoes of a struggling new homeowner in 1975. Maybe that $39,500 seemed almost too much to pay but they pulled the trigger anyway. After all, they were just married and expect a little one soon. They had fears and worries just like you. Every year that fear slipped away more and more.

The reason? …….Inflation.

As the cost of homes increased, the value of their home has also increased. Soon that home was worth seventy thousand dollars but something else happened. Income rose. Inflation can work as a positive if you consider wage growth. Now in 1986, that same family earned a whopping $30,000 a year. The result? This family had a mortgage payment based on thirty-nine thousand, a house worth $70,000, and their income had more than doubled. You see a home is what builds wealth. With assets and family alike.

Next time you consider purchasing a home make sure you are thinking about tomorrow, not just today. I am sure if that family had not purchased a home in 1975, they would have some feelings of regret by the ’80s. Interest rates and inventory are low. Will you have the same opportunity tomorrow? so should you buy a house in 2019?

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Inflation and Making the Decision to Buy a Home

As the cost of homes increased, the value of the homes have also increased. Soon that home was worth seventy thousand dollars but something else happened. Income rose. Inflation can work as a positive if you consider wage growth. Now in 1986, that same family earned a whopping $30,000 a year. The result? This family had a mortgage payment based on thirty-nine thousand, a house worth $70,000, and their income had more than doubled. You see a home is what builds wealth. With assets and family alike.

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Should You Buy a House ? Budgeting for a Home

Before you decide to purchase a home sit down and complete a detailed budget of your expenses. In a column beside your current expenses, enter an estimate for a new home. By knowing how much you spend you will know how much you can afford.

Budget Checklist

It is important to know that this exercise is not meant to give you a precise calculation for a new home. You do not even know what the price is yet! This exercise is intended to be thought-provoking. Thinking about these items will remind you to look into different aspects of a home you might be interested in purchasing.

It Will Be More Expensive

Your home is going to be more expensive than you think…. and it is supposed to be. This is your house. Not a car or an RV but your home. In most households, 30% of the income goes towards the home.

This may sound scary and intimidating but these are the sacrifices we make when we want to own a home. And the best part about investing in your home? It keeps or increases in value. The money you spend on car payments will always end up in a junkyard someday but a home….. That is forever.

So should you buy a house in 2019? As one of the more secure investments you can make, I do fee buying a home a great idea. If you have additional questions about your options, you can reach us at 518-324-5544. We would love to help you along the home buying journey.

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