10 Reasons To Buy a Home

 Enough with the doom and gloom about homeownership.

Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.

.After all, at the peak of the bubble five years ago, Time had a different take. “Home Sweet Home,” declared its cover then, as it celebrated the boom and asked: “Will your house make your rich?”

But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home.

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.

5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.

6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

8. It’s forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity. As a forced monthly saving, it’s a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That’s below last year’s peak, but well above typical levels, and enough for about a year’s worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the “glut” simply won’t matter: It’s concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won’t have any long-term impact on housing supply in your town.

Write to Brett Arends at brett.arends@wsj.com

I am very pleased to announce that my company will be building their 4th Habitat for Humanity House starting on September 25th.  Coldwell Banker Sea Coast Realty is dedicating the build to recently retired Habitat Executive Director Barbara Birkenheuer.  We will be building this home in downtown Wilmington on Corbett Street for a single working mom and her 11 year old daughter.  The new owner will be Carol Tyson, a Certified Nursing Assistant for the past 8 years at Britt haven of Wrightsville.  I have participated in the past with a Habitat Build and found it very rewarding; this year I chose to Chair the Committee to coordinate the labor force needed to pull off the build and will be on site digging footings, swinging hammers, and seeing it through to the end!

The Super Bowl may be the most riveting sporting event in the United States, but in much of the rest of the world, soccer – actual hands-off football – is the sport that glues the most people to their television or computer screens. Once every four years, the 32 national teams that survived qualifying rounds compete in group elimination matches that produce, eventually, two semi-final winners to play for the World Cup. This year, competition began in South Africa on June 11; it ends with the Cup match in Johannesburg on Sunday, July 11 – to be followed by wild, passionate celebrations in the cities of the winning nation. Count on it.

If you’re a fan, or your children or grandchildren are, expect some unfamiliar words and sounds to be coming your way when you tune in to the broadcasts. The host country’s team, nicknamed Bafana Bafana(is Zulu, meaning “the boys, the boys”), isn’t picked to duplicate the fairytale victory of the South African rugby team’s victory in the 1995 Rugby World Cup – an event depicted in the recent film Invictus – but its fans are certain to make a lot of noise blowing brightly colored plastic trumpets called vuvuzelas (Zulu for “making noise”). The sound is a cross between the buzz of a huge swarm of angry bees and the bellow of a sick elephant – but it’s apparently inspirational.

The U.S. team qualified (ranked 11th worldwide, it is part of Group C, which also includes England, Slovenia and Algeria). Watch and you’ll be joining the world’s largest television audience, which some estimate may exceed 700 million for the Cup Final. (The most-watched Super Bowl game ever, this year’s New Orleans Saints’ victory over the Indianapolis Colts, drew a reported 106 million viewers domestically.)

Whether the World Cup grabs your attention or you’re caught up in the middle of the baseball season, expecting an engaging Wimbledon or patiently waiting for pre-season American- or Canadian-style hands-on football – I wish you good viewing of the sport of your choice as summer unfolds.

Hello all,
Heard of the Good Neighbor Next Door Program? Well if you or someone you know is an employed professional law enforcement officer, teacher, or firefighter/emergency medical technician you should follow the link below to find out how you can purchase a home for a 50% discount. That’s right, half off the price of the home. Forget about the $8,000 tax credit that just expired, how about $50,000 off a $100,000 home? Follow this link for details or call me at 910-232-2801.
http://www.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm