Everyday I see ads from real estate agents. “It’s a great time to buy!”
Stable economy. Low interest rates. Why rent, when you can buy? It’s a great investment!
I’ve seen the same ads for my entire 17 year real estate career.
Over the last 17 years was it ALWAYS a great time to buy? As an investment?
The argument could be made that investing during the 1930’s, or from 2009 – 2014 would have been a great time to invest in housing. Prices were depressed and growth was just around the corner. That’s easy to say when you’re looking back, but there’s no way to know where housing prices will go in the future.
Is real estate really a great investment?
Actually, I think it may be the worst investment. Or at least a close second to the worst investment, a car.
Seriously. I’m in the business, I see the horror stories. People buy a house, sink loads of money into it and almost never, even in good times, do people recover the money they put in.
So, I’m here to tell you, with great confidence, now IS NOT the best time to buy.
Recently, I closed on a property for a client who purchased their home ten years ago. They paid $400,000 for the house and recently sold it for $365,000.
Quick math tells you that they lost some money, only it’s worse than that. Over that ten year period, they have easily spent $50,000 in improvements.
Last year I showed condominiums built only 8 years ago that are selling today for $200,000 less. Not exactly a great return on their money.
Year after year, regardless of economic conditions, I can show you folks who have lost major amounts money when purchasing, and investing in a house.
What’s a person to do? Should you rent the rest of your life?
Maybe. If finances were the only factor, yes, renting in most situations is a better decision.
That doesn’t mean that you can’t make money buying and selling houses. Professionals do it all the time. Builders and investors make money every single day remodeling homes and selling or renting for profit. However, they work in much shorter time frames which are much more predictable. And they’re PROFESSIONALS.
This doesn’t mean you shouldn’t buy a house. In fact, I would argue that despite the financial risk, you should buy a house, but for a different reason.
The only metric that matters when you’re considering a purchase is QOL.
Quality of life.
Quality of life, with respect to real estate, looks something like this:
Do you love coming home to your house? Are you near the ones you love? Are you near the park that puts you at peace? Are you near your favorite coffee shop? Are you in the school district where your kids will get the best education? Is it convenient to your work? Is your truck inside the garage, or out on the street?
No, the best time to buy is not now. Or, maybe it is. Nobody knows.
My advice is to avoid trying to time the market. Instead, buy a house because it will make your life a better life to live.
Bil Keane, an American cartoonist most notable for his work on the newspaper comic The Family Circus, is famous for this quote: “Yesterday’s the past, tomorrow’s the future, but today is a gift. That’s why it’s called the present.”
When it comes to real estate, and most decisions in life, quality of life, as a guide, will never let you down.