The American Dream is not Dead

Does owning a home still make economic sense? Absolutely YES. A little perspective is in order....

Anyone who believed that home prices would never fall has learned a valuable lesson. Since the national peak in 2006 home prices have fallen roughly 30% per the Case-Shiller price index. The good news for us Dallasites is we have seen only an average of 4.2% during the same time period. The Federal Reserve shows the value of residential Real Estate owned by households has fell to $16.5 trillion in the first quarter of 2010, down from $22.9 trillion in 2006. Depressing? Yes, but the end of the American Dream? Not even close....back to the perspective...

If the American Dream is to own a home that appreciates 20% to 30% a year and making a house into a vehicle of paying bills then yes that dream is over. In fact, it has turned from a dream to a nightmare; just ask the million of homeowners out there that have gone through foreclosure.

Now if the American Dream is to have a fairly safe long-term investment coupled with the joy and satisfaction of owning a home then that dream is alive and well! With this perspective, owning a home still makes a lot of sense and now is a great time to buy. Why now? Good question.

Mortgages are cheap and it is more of a buyers market depending on where you are looking to purchase and at what price point. Today you can get 30 year loan for around 4.3% compared to 6.6% four years ago. These are the lowest rates ever. Do the math- four years ago if you purchased $300k house with 20% down it equated to roughly $1532 a month mortgage payment. Today that $300k house would sell for $287,400 with 20% down would carry a mortgage payment of $1138 or nearly a $400 savings per month.

Ask yourself this question- do you think interest rates are more likely to go up or down over the next year? I have asked around and most people say UP. If inflation picks up, we won't see these mortgage rates again in our lifetime. And if we get deflation and rates fall, you can refi!

Your home is not the stock market and shouldn't be viewed as a way to get rich. Your home however is most likely to be your single largest investment and is a great way to diversify your portfolio for long term growth. Today you can buy a better home than you could four years ago, you have more homes to choose from and you will be paying yourself each month towards equity, which is a forced savings plan.

The American Dream is alive and well if you have the right perspective.

Please visit the S&W Home Team website for information on buying and selling a home: www.SWHomeTeam.com or call today at (972) 393-9602