Have you heard this before: Renting is like throwing your money away. Buy a house now because home prices are rising. A house is the best investment you can make. Owning a home is the American dream.
Sound familiar? Like marriage and parenthood, buying a house means you can shed the label “recent college grad” and call yourself grown-up.
But a home is not necessarily the best investment you can make. And even if you can afford it, it may not make you happy.
Peel back the packaging on those reportedly low interest rates. Those are reserved for people with stratospheric credit scores, 20% for a down payment and minimal student loans.
Also, have you met the zombie homeowners? They still walk this land. Between the peak of the market in June 2007 and May 2013, loads of homes were foreclosed on.
The foreclosure crisis disproportionately affected young people and other groups. Plenty of college-educated, employed people whose mortgages fell underwater and, credit rating be damned, they opted to abandon their homes.
Home prices are rising now, and Zillow estimates they will go up 7% in the next 12 months. But from peak to trough, most homes lost a large percentage of their value.
Recent studies show that high rates of homeownership can actually dog a region’s economic growth. A May study showed that when a state doubles its homeownership rate, a doubling of unemployment later follows. An increase in homeownership led to lower levels of labor mobility, longer commute times and fewer new businesses.
If you plan to stay in a home for less than 3.6 years, it’s better to rent than buy.
“Many say you shouldn’t use a house as an investment. Investing in the stock market or some other vehicle is a better choice,” said Svenja Gudell, senior economist at Zillow.
For more information on renting an apartment in Raleigh, NC, contact Abberly Place Apartments.