If You Rent, You Are Killing Your Financial Future

September 30th, 2009 categories: For Buyers

Robert Shiller is well known for being part of the Case Shiller home price index and in today’s Wall Street Journal on-line he is very candid in an interview concerning the current state of the national real estate home market. Below is a comment on the current strength in the housing market.

“But it probably isn’t the beginning of a major boom, just because the economy is in such bad shape. There’s also a chance that it will reverse. It’s still only three months old, so it’s very hard to be sure at this point. The most likely scenario is that it won’t continue at this high rate of increase, but that it will neither go down a lot, nor up a lot.?” CLICK HERE TO READ THE WALL STREET JOURNAL ARTICE

Here is the question, if home values were to remain flat in Honolulu, why should you buy now?

1. You have to live somewhere and that somewhere should be you own home. If Oahu will be your home for the long-term, given that values are off their highs, buying today or in the near future makes a great deal of sense to me…even if values don’t go up.

2. Low interest rates are making Honolulu homes very affordable. If you barrow $100,000 on a 30 year mortgage at 5% your monthly payment will be $537 per month. Play this out and the monthly payment on $500,000 is $2,685 per month. Ask you accountant about the possible tax advantages, but when adjusted for the tax benefit most of us get from homeownership, it is cheaper to by a $600,000 home than to rent it. Finally, if interest rates move to 7% the same $500,00 mortgage would cost you $642 more per month.

3. If you are renting you may be paying a mortgage for someone. Whenever I talk to a renter, the previous sentence seems to hit home! The reality is this, if you are renting you are either buying a home for someone else or you are subsidizing their lifestyle. Why not buy a condo or house that will be yours! No more rent increases and no one telling you what you can do with your home.

Today’s blog seems to be targeted at someone that does not yet own home. I believe so strongly in the power home ownership to transform a person’s financial life, that I recommend for them to stretch and get creative to figure out a way to buy.

SEARCH FOR YOUR HONOLULU HOME

If you would like to discuss buying your first home or upgrading to a better house, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.

This entry was posted on Wednesday, September 30th, 2009 at 2:36 pm and is filed under For Buyers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.