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Should You Buy a Home?

There is no such thing as a good or bad time to buy a home. There is only times in which the difficulty and patience required to find value is increased. Even in a real estate market like today you can find value, however, you must be prepared to say no and be told no. If you need to pay more than normal, expected value, just say no!

Additionally there is no such thing as a sellers market. For a market to exist there needs to be both buyers and sellers. If the price is too high, just say no! If buyers start saying no, sellers cannot sell for super high amounts. Buyers create sellers markets.

I realize this is overly simplified. Supply, demand, and many other factors contribute, yet ultimately buyers create sellers markets.

That brings up the old debate of rent vs own and the myth the renting results in "throwing your money away" or "Enriching someone else when you could be building equity." There is a certain amount of truth to these statements, yet do not buy into them. Real estate, be it investment or primary residence, can be a tremendous benefit to your finances, and your future, but done wrong, it can absolutely destroy your finances and future. Renting can save you a lot of heartache, and even money when you have a proper financial plan, made with a professional. Do not fall for the fallacy that because the mortgage payment is less than rent, it means buying is cheaper. Realistically there is far more expenses to owning, and the average person underestimates, often significantly, how much they spend on their home.

Owning is a good thing. Owning is a worthy goal. However, it must fit within the context of the overall financial plan. And a financial plan made without the assistance of a professional, regardless of how good a person is with money, is almost always missing something, or multiple somethings. The 3rd party helps overcome personal biases, and provides additional insights that are easily overlooked.

Do not overpay for your home. Do not assume owning is best simply because conventional wisdom says so. Conventional wisdom is generated by the crowd, and especially in finance, the crowd is so often wrong. More and more the crowd, and even the average individual, is too concerned about the short term. Finance is deeper than now.

Proverbs 24:27 says,

"Put your outdoor work in order and get your fields in order; after that, build your home."

I think this is far deeper than home construction and farming. Clearly buying a home is good, but first how is your budget? How is your future plan? Are you on the, "I will invest more when my car payment is gone?" Or, "I will pay off my mortgage and then I will invest more for the future."

Intuitively, and in the short term, both these statements make sense, yet in the big picture your future savings is worth extending your mortgage payoff. Also, you should not buy a car requiring a payment that will require reducing your needed future savings and investments monthly.

Remember, while there is certainly more uncertainly than normal in the market, statistically your investments will be okay. They WILL suffer losses, and sometimes big losses, on the journey, but statistically and historically you will make up for the losses in a big way in the long-term. The older you get the more conservative you will likely need to be, but being in the market is a good thing.

Yes, buy a home. No, do not rush to buy, or overpay, because you think you are supposed to buy. Yes, invest for you future, in the market (even now). No, do not make a habit of "timing the market," which is selling out of the market and buying back in, in an attempt to avoid losses. Chances are you will miss out on gains while waiting for the crash. Yes, rent is a positive thing, and can be amazing for your finances. Yes, talk to a financial professional and engage in financial planning at least once a year so that you do not base your financial plan on articles, including this one, designed for general purposes and not your very specific and personal circumstances.

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This website and it resources are not intended to provide personalized investment advice.

Personalized investment advice is far more nuanced that a website, blog post, or video can provide.

Please contact 320 Life, LLC, a registered investment advisor in the State of Michigan, in order to schedule an appointment and create a personalized plan. Remember investing is risky and there is no guarentee of investment performance.

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