I found this article in the New York Times called: "Great Time to Buy (Famous Last words)" and I have to say that I do not completely agree with what Frank Llosa,a real estate agent working in northern Virginia, says: “People are frequently buying for the wrong reasons,” . “In most cases, he says, they think that they are getting an income tax break or that their home is an investment.” From my point of view, buying a home as an investment is a good reason to buy a home.
I have been at SUU for close to four years now and, I have never heard one of my economics or finance professors say that buying a home is not a good investment. I ran some numbers to justify my point of view and this is what I found. My roommate and I pay $700 a month for renting a house in Cedar City, UT. We would pay this amount (700*12 months * 50 years) = 420,000 over our life time. Comparing this to if we were to borrow a $300,000 loan at 6 percent equals $367,680. There is a huge difference here, I can buy a home for $367,680 over 30 yrs and save $52,320 over 20 yrs not paying rent. I’m not counting the increase in value my home will gain over 30 yrs or the money I will be saving not making a mortgage payment over the next 20 yrs. What if I wanted to move and sell my house? Yes, the housing market could be in a slump and I might not recoup all the money I borrowed from the bank. So I lost some money but I also lose for paying rent for fifteen years and I decide to move. When housing prices rise rental fees rise, they do not remain the same. My conclusion it is always a good investment to buy a home when you are planning on staying somewhere for a long time.