Owning a home isn't for everyone. Some people can't afford it. Others simply don't want the responsibility of having to maintain a property when the option to rent one -- and have someone else tackle maintenance and repairs -- is on the table. But new data from home services company Porch reveals that Americans of all ages are convinced of one thing: Owning a home is a solid investment.
Roughly 88% of baby boomers, 85% of Gen Xers, and 86% of millennials and Gen Zers concur that owning a home is a good investment. And about 80% of boomers, 74% of Gen Xers, 73% of millennials, and 79% of Gen Zers think the housing market will rise over the next 10 years, making a home a safe place to put your money.
In fact, respondents across all age groups ranked owning a home as the safest investment over the next 10 years across the following options:
- Savings accounts
- Land (non-housing in nature)
- Collectible cars
- Sports memorabilia
Given the tendency of home values to fluctuate, it's encouraging to see so many people put more faith into real estate than into savings accounts or historically non-volatile bonds. But while a home can be a safe investment, there are certain steps you can take to ensure that things shake out that way for you.
Buying the right home
It's possible to lose money in the housing market, especially if you're not careful. But if you do your research, you're less likely to lose money on a home.
First, it pays to buy in a neighborhood where home values have steadily increased. This doesn't mean you need to buy someplace where your $300,000 home is likely to jump to $450,000 within a year. But if you focus on areas with slow and steady growth, you're likely to have a similar experience.
Next, make sure you pay the right price for your home. You may fall in love with a moderately upgraded three-bedroom Colonial listed for $350,000, but if the average home price in that neighborhood for a similarly sized and updated property is $300,000, paying an extra $50,000 is probably a bad idea.
Another thing: It pays to buy a home you're willing to hang onto for at least a few years after closing on your mortgage. That's because there are costs associated with closing on a home loan, and if you live in your home for a number of years after the fact, ideally, your property's value will increase enough to make up for them. If you try to sell sooner, you risk taking losses.
Along these lines, you can avoid losing money on a home by buying one you can comfortably afford. That means choosing a property whose mortgage payment, insurance, and property taxes don't exceed 30% of your take-home pay. That way, you'll be less likely to find yourself in a situation where you have to unload that property at any price because you can no longer keep up with your housing expenses.
Though there's no such thing as a risk-free investment, clearly, the consensus is that owning a home is a relatively safe one. Vet your home carefully before committing to it, and with any luck, your experience in the real estate market will be a positive one all around.
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