Buy a Home in the Next Upcoming Neighborhood
I want to share an article I read yesterday by another great St. Louis real estate agent & blogger, Dawn Griffin.
Dawn pointed out that many of today’s trendy (and expensive) parts of St. Louis City have appreciated dramatically in the last 10 years even with the current market downturn. She makes the point that the people who bought in Tower Grove South and Soulard 10 years ago when these areas weren’t so hot, now have valuable properties in trendy parts of town.
Dawn reminds us that there are always great opportunities to buy in the next trendy neighborhood.
Her post got me thinking about how you don’t have to be willing to buy in a transitioning area to have made a great investment by purchasing 10 years ago.
Homes are Investments
Recently I was talking with someone who said he heard on CNN that homes shouldn’t be thought of as investments, but just as a place to live.
Most homes will appreciate over time, providing homeowners with an asset that is worth more down the road than when it was purchased. Even if a home doesn’t appreciate over time, the tax advantages for homeowners allows them to reduce their income taxes, keeping more of the money they earn.
Plus, we all have to live someplace. You might as well have your monthly payment paying down YOUR mortgage rather than paying off your landlord’s mortgage.
Let’s say that you buy a home and actually own it for 30 years (without refinancing and starting over the 30 year clock). At the end of 30 years, you will own the property and be able to live there for just the cost of real estate taxes, insurance and utilities. No more monthly mortgage or rent.
If the same person had rented for 30 years, he would continue paying rent for the rest of his life.
Most of us will see our income decrease when we retire.
It is a good plan to have a paid off home, reducing your expenses, when you are ready to retire.
Homes in Most Neighborhoods Appreciate over Time
As I said earlier, I believe that most homes are good investments. They just aren’t SHORT TERM investments.
Purchasing a home is a very good investment if you plan to stay for 10 years.
You will pay less in income taxes. You will avoid paying rent and instead build equity in your own home.
And when you do go to sell, the odds are in your favor that you will sell for more than when you bought.