Nov. 16, 2011
The national media still reports on the collapse of the housing market and the downturn in the economy. While I agree unemployment is still too high and housing is not appreciating the way it did from 2000 to 2006, I believe opportunity’s knocking. Now is the time to buy a home.
Why would I advocate buying a home today when California, Nevada, and other states are still dealing with large numbers of foreclosures? Because we don’t live in California, Nevada, or anywhere else. We live in Texas, and Texas has not experienced a foreclosure problem nearly as large as elsewhere in the country.
Texas has seen job growth while other states have lost jobs, and Texas-area home sales have remained pretty steady for the past several years. In fact, in some Texas localities, home sales are up and prices are starting to rise due to increased demand.
Why would I recommend buying a home today when the media is full of “doom and gloom” stories about the housing market? Because you have to live somewhere, and home mortgage money is cheap and readily available for people with good credit. If you have a job, pay your bills on time, and shop for a home you can afford, you can get a home mortgage. Today, a typical 30-year, fixed-rate home mortgage has an interest rate of around 4%.
I remember in the late 1970s, people were applying for mortgages with 16% to 17% interest rates. People joked about using a credit card to “charge” their home as the interest rate was cheaper. For a $100,000, 30-year, fixed-rate loan, today’s loan payment would be almost $1,000 less per month than for the same loan in the late ’70s.
Why would I suggest buying a home when gas prices are approaching $3.50 a gallon and inflation fears are heating up? Because “locking” your biggest living expense with a stable, fixed-rate mortgage at today’s rates means that when other items go up in price, as a Texas homeowner, you will still have the same mortgage payment. Do you believe gas will still be $3.50 a gallon 25 to 30 years from now? I don’t. And I don’t believe there is a landlord in the country who’ll sign a lease “fixing” today’s rental rate for the next 30 years. Renters don’t have the luxury of a fixed monthly housing cost that spans decades!
Why would I tell you to buy a home instead of renting somewhere to live? Because no matter where you live (and we all have to live somewhere), you are buying a home for someone. If you are currently renting, you’re buying the property for your landlord. The landlord will reap all the benefits of ownership – property appreciation, stable mortgage payment, tax advantages, etc. – while you pay all the costs. Believe me, when the plumbing needs repair, your landlord may pay the immediate bill, but the cost of the repair is included in your monthly rent. Over time, the renter pays the cost of all repairs!
Homeownership has traditionally driven our economy, and I believe it is the answer to our current economic woes. When people invest in a home, they also buy new furniture, appliances, lawn equipment, paint, landscaping, and numerous other items that enhance their quality of life. These purchases cause manufacturers and other suppliers to hire more people, raise wages, and stimulate local economies. Economists call it the multiplier effect. I call it what’s great about our country. And, Texas is a better place to live and work than most. I should know – I’ve lived a lot of places.
When people have better jobs and wages, they purchase newer, larger homes … and the cycle begins again. Collectively, homeownership leads to a better economy, stronger neighborhoods, and a better future for our state and nation – a better future for our children and grandchildren.
For all these reasons and many others, I say … Opportunity is knocking. Answer the door. Buy a home.