The mistake of not buying a house

The year 2008 was a rough one. Here in Cedar Rapids it was the year the Cedar River spilled over and caused unprecedented damage. Months later, the real estate bubble burst and across the nation, the economy spiraled into a free fall.

It took a huge amount of effort to spring back from these disasters. If you take a walk downtown or on the riverfront, you’ll see that since the flooding, Cedar Rapids has recovered in some very exciting ways, transforming itself into a bustling 21st-century city. Likewise, the real estate market across the country has largely recovered.

However, there are lingering effects of the crash. One of them is the fact that many people, especially millennials, don’t want to buy a house. They see homes as risky money traps and think it’s easier and more economically sound to rent.

There are several reasons why this line of thinking is misguided.

The right path to take

Despite some understandable reservations, home ownership remains the best way to grow wealth.

The reasons for this are simple. You have to live somewhere, and unless you know the magic combination to get free rent, you’ll have to pay rent. Over the course of 30 years you could very well spend $300,000 on rent and have nothing to show for it, or for the same amount you would pay in rent, you could pay down a mortgage on a $300,000 home.

Bottom line: Buying a house gets you ahead.

Some advice

It’s often the case that people watch too much HGTV and have unrealistic expectations for their first house. In many cases the way to land in your dream house is by buying up.

Most financial advisers recommend housing payments consume no more than 30 percent of your take-home pay. This means if you’re starting out in your career, you probably won’t be buying that lakeside property you’ve always dreamed of.

Your starter home may not be your dream house. However, if you work closely with a real estate agent and identify some up-and-coming areas where housing values are likely to appreciate, you could be several thousand dollars ahead when you want to sell.

There are many ways to grow wealth and many investments you can make, but of all the options out there, building wealth through buying a home makes the most sense. The simple reason for this is you have to pay to live somewhere. Why not have those monthly payments go to increasing your wealth?

To discover some of the great home-buying options in Cedar Rapids, contact a Coldwell Banker Hedges Realtor® today. They know the market and can show you some great properties you’ll be happy to call home.

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