According to MSN Money, here are the three worst reasons for buying a house:
* It’s “better than the stock market.” “In the past 40 years, the average appreciation for homes has exceeded the inflation rate by only a percentage point or so. Compare that to stocks, which have bested inflation by 7 percentage points in the same period.”
* “I’m tired of throwing away money on rent.” (I am renting now.) “You’re not really throwing money away when you send a check to your landlord, anyway. You’re exchanging it for a place to live. You’re also getting flexibility and freedom — things you sacrifice when you buy a home.”
* “I need the tax deduction” This is just faulty logic. “If you’re in the top federal tax bracket, every dollar you pay in mortgage interest only saves you 35 cents in taxes. Most people get even less, since they’re in the 25% or lower tax brackets.” Even with the tax deduction, which might disappear or be reduced in the future, you end up paying more.
The best advice on the issue of whether to buy vs. rent remains the time-tested version: Buy a home when the timing’s right for you, when you can swing all the costs and when you plan to stay put awhile. That way you can ride out any downturns in the market and benefit from any appreciation while enjoying a nice and affordable home in the meantime.
When I’m ready to buy, the decision won’t be based on the market cycles. I’ll have a need, and as long as I fill that need smartly, I should be better off in the long run.
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