Home Buying Not The Best Investment

Buying a home is often called the American dream. But for those who buy with a 3 percent down payment (or no down payment at all), it can be a poor proposition.

A Harvard University study of home sales in Philadelphia, Boston, Denver, and Chicago found that sellers of low-priced homes lost money up to 40 percent of the time once transaction costs were included.

Economists at Wellesley College say whether home ownership is a good or bad investment often depends on the time of purchase. The odds of taking a loss are higher if the seller bought after home prices had already risen and if the buyer stayed in the home for only a few years.

Regular investing in stocks and bonds could be a better alternative. Returns on housing tend to be lower than returns on stocks. The risk of losing money is high when most of a family's wealth is tied up in a single asset. Factors to consider:

* When satisfactory rentals are not available, buying a family home could be the best option in any case.

* Owning a home can cost more than renting when house payments, taxes, insurance, and maintenance are considered.

* For those who don't plan to stay in a home for seven years or more, the risk of losing money on a home sale is higher.

* Buyers may not benefit from the tax deduction for interest because their standard deduction is a better deal.

* Easy home-equity loans could mean little forced saving or equity building.

* Those who make a small down payment may pay higher mortgage interest rates and the cost of mortgage insurance.

Over time, buying a home can be a good wealth-building strategy. When housing prices rise, the owner benefits. But housing prices don't rise very much in some areas, and many people don't stay in a home long enough to build equity.

 
Home Buying Not The Best Investment

 
Long Island Families - Long Island, NY
 

Current Related News:

Industry bigwigs to work out operational plan for raising farm growth - NEW DELHI: Industry bigwigs will put their heads together with the officials of the Ministry of Agriculture to work out an operational plan' for the Prime Minister's Council on Trade and Industry, on how to raise agriculture growth rate and food security.

Industry funds acknowledge collateral damage - Several industry fund executives have acknowledged the industry fund's war on commissions has caused collateral damage to financial advice and hurt the ability of super funds to promote in-house advice to members.

Industry should fund entire blue-box program: mayor - The City of Orillia is waiting for the day when industry picks up 100% of the cost of the household recycling collection, or blue-box program. If all goes well, the wheels will start turning this fall.[...]

Adult Industry Sees iPorn Potential in iPhone - Adult industry sees potential in iPhone's FaceTime video chat. iPhone - Handhelds - Smartphones - Wallpapers and Themes - Video