VOL. 129 | NO. 109 | Thursday, June 05, 2014
Rays of Wisdom
Dana and Ray Brandon
Homeownership: Still the American Dream?
By Ray and Dana Brandon
Ray’s take: There was a time when owning a home was a key factor in achieving “The American Dream.”
That was when it was actually considered a home and not an investment. Sometime between the end of World War II and the 1990s, a home became a house. It was less about the place where you created memories and more about equity and resale value. Then it all came crashing down.
Per the Census Bureau, during the first quarter of 2014, homeownership for Americans 35 and younger declined to 36.2 percent. This is the lowest on record since the census's Housing Vacancy Survey began tabulating homeownership by age in 1982. Homeownership for all ages dropped to 64.8 percent, the lowest level since 1995.
The decline in homeownership is no doubt due in part to the economic decline experienced in recent years. Increased down payment size and more stringent credit requirements have made mortgages much harder to come by. Coupled with persistently high unemployment, fewer consumers are looking to buy a home.
There are many good reasons to buy a home, but making money may no longer be in the top five. If you are one of those thinking of buying a home you should take a hard look at the pros and cons of homeownership based on your personal circumstances.
Ask yourself these questions. Do you think you’ll be moving within the next five years? Frequent moves will play a factor in any equity you might build up. Is this the best use of your dollars? Are you buying a home because you think “that’s what you should do” at a certain point in your life?
Homeownership is a big step and one that should not be taken lightly.
Dana’s take: Some couples enjoy shopping for houses, but have no intention to buy. Attending open houses can even serve as weekend entertainment. Some say they are “just looking for new ideas for our current home” or “getting an idea of what’s out there before we someday buy.”
While "just looking" can be fun, you may be setting yourselves up to fall for the next "bargain" in the neighborhood. "It's selling for only $80 a square foot – a bargain in this neighborhood!" Next, you just can't pass up such a deal, and before you know it, you've bought a house that has twice the square footage you need just because you got a good deal.
Perhaps if you love looking at houses, viewing the Sunday newspaper home ads can be a safer way to get your fix.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.