Has the American Dream of Home Ownership died?

Lately, I have heard many people saying that it no longer makes sense to buy a house. People are saying that you can lose so much financially with a house if the market turns south, that you would be better off just renting a house. That way if the market value on the house drops then you can just finish your lease and then walk away.

I understand the thinking with that statement but I believe that there is a flaw in that logic. Yes, lately owning a house can seem like more of a burden then renting. In addition, with the banks going thru their thing it is hard to even get a loan to buy a house.

I think that Americans may be starting to lose trust in the American Dream. Let us not forget though that America, like everywhere else in the world, works on an economic cycle. Therefore, the recession or depression that we are in right now is usually the darkness before the light. We will eventually have another economic growth period. When that happens everyone will say you are crazy if you are not buying a house.

In reality, now is a good time to buy a house because the market has already experienced a large decline. The overinflated prices of the early 2000’s are gone. Now prices are undervalued. Banks are giving away houses to try to empty their inventory. Now you may be thinking that you do not want to buy until the market starts to turn around but by then it is too late. Everybody talks about how they should have invested in the past. Investing in the past is easy. There is no way to time the market to know when the exact moment will happen that prices will start to go up. So since you cannot perfectly time the market just consider buying when you know the market is down.

By the way, another alternative to protect against market value loss when buying a house is to buy into a rent to own program. You get a house with today’s price protected but if the market value drops drastically, you always have the option of walking away with no negative credit loss to yourself. Just some food for thought.

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