Before the crash of 2007, buying a house was almost too easy. Banks were not only willing to lend to less than ideal clients, they were pushing for it. They had the game rigged. Even if a borrower defaulted on a loan, they made money because they bundled the loans in junk bonds and sold them with AAA ratings to unsuspecting investors. Plus, the loan was secured by the property and eventually property values always recover, like now. The real estate market is robust again and houses are appreciating, even with low numbers of millennials trusting the house purchasing model. But if you are interested in buying a house again, there are some real advantages to doing so.
First of all, typically, we must pay for a place to live. Instead of paying for your landlord’s property, you can begin building equity in a home. This obviously assumes that the house will appreciate. They usually do, however, except when bankers behave badly and sink the entire market. This scenario is unlikely to recur anytime soon.
Secondly, when you buy a home you feel more invested in it therefore you put more effort into making it nice. Since people tend to spend a majority of their time at home, having a comfortable and esthetic place improves our quality of life. Buying a home simply improves your quality of life.
Third, a decade ago we witnessed that there is some risk to ownership. Generally owning a home tends to pay off. Not only do you pay yourself instead of a landlord for your living space, you gain tax advantages while you’re buying and you only pay capital gains tax when you sell at a profit. Additionally, even when your house increases in value, you can claim depreciation on your taxes because there are maintenance costs involved in keeping up your house.
Fourth, the housing market scared many potential buyers away from home purchases. This has caused rent to increase. At this pace, rent will exceed purchasing costs, thrusting people back into the housing market. This is particularly true due to the millennials reaching the age where their family needs, earnings and career trajectories all override their distrust of large purchases.
Fifth, buying a home allows you to customize your home experience. Instead of simply finding a place to live, you are investing in your living. This creates an experience where homeowners look for things like environmentally friendly features, custom designs and accommodations. This allows your family needs to grow into the home.
Additionally, although the financing of a home has stricter guidelines than it did a decade ago, the recourses available to us have made the process of home buying is easier than ever. With the internet allowing people to shop, compare prices and prepare a checklist for all of the steps that are taken in borrowing and buying. This allows potential buyers to be better prepared mentally for what they can afford, where they want to live and consider all of the potential issues surrounding such a major purchase.