Many people are still wondering whether or not real estate is one of the best investment strategies for long-term wealth building. Is investing in homes still a smart investment for the average individual? Is a home still the best investment of a lifetime for most Americans? If so, why are some pessimists still questioning the rebound in the news?
Behind the Headlines
Real estate companies will always boast about the benefits of acquiring real estate because it is their job. Unless of course they’ve gotten into the rental business and make their money by touting the benefits of renting instead. Let’s be honest- statistics can be found and twisted to support any point of view and argument. Entire years of real estate statistics have been revised in the past, new indexes have been created to restart the clock, and even the national GDP was revised. Most don’t even bother to tune into job and unemployment numbers anymore due to how skewed different data sets have become.
Even though the most conservative figures show housing rebounding, especially in hot areas like San Diego, there continues to be doubters. However, it doesn’t take much more than a little common sense to figure out real estate is still the best investment for most of the population. This applies to affluent individuals with top 1% income, as well as those that need to pinch pennies. Stocks have continued to demonstrate extreme volatility and risk.
In the stock market, plenty of Americans have lost six figures, literally overnight. Direct investment in real estate isn’t that volatile, and nothing is ever lost until a property is sold. For example, some Southern California homeowners saw their home values rise and fall on paper during the last couple of decades. However, if they don’t sell their home for a few more years when prices will likely exceed their previous peak, then those same homeowners will come out handsomely.
Invest in Real Estate, Even if You Can’t Afford Your Dream Home
One of the most common excuses that many people give for not buying a house is that they can’t afford their dream home yet. If they don’t start investing in some way now though, the odds are against them ever being able to afford that dream home. Incomes haven’t been going up very much, but rents and home prices still continue to. Those wanting to buy a home should not invest any money in stocks or bonds, but should prefer saving cash for a down payment for a starter home. Investing in real estate is the best way to build up more wealth and cash to buy that dream home down the road. If you can’t find a home that you would be willing to live in for even a few years, then considering buying an inexpensive rental property instead. That will still benefit from market appreciation, with some cashflow along the way.
Many Americans are sadly being seduced into the lifelong renter mindset without realizing the horrific consequences it could be dooming them to. Consider those who are paying 50-percent of their income in rent right now. Rents have been going up 20-percent a year in many places. If rent goes up another 20-percent, many of those people would be priced out of even renting. Then what?
With Americans living longer, and with company retirement plans evaporating, they also need to consider where they will live during 20+ years of retirement on a limited income. To put things in perspective, even the legendary billionaire investor Warren Buffett still calls his own home his best investment ever.
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