I know this is not what you want to hear, but your primary home is not an investment. It’s not a cash machine that is going to make you rich. It’s where you go after work to make you feel happy. It’s your sanctuary. It’s where you entertain friends and family and make memories.
If you are looking to buy your primary residence, the place that you will personally call home, don’t look at it like a stock. First of all, real estate is not liquid. To get a fair market price all you have to do is look at average days on market in any neighborhood to find out how long it would take to get your money back. For Boston this is typically 75-125 days depending on time of year and neighborhood. Add in another 30-60 days for closing and you are looking 4-7 months to get out of whatever you are trying to sell.
If you are planning on moving within the next two years, rent (search for your rental right here 
). Don’t go buy a homejust because you can. Between fees and closing costs, you will be lucky to break even. Until recently, we didn’t see real estate prices rising 30% a year and I hope we never do again because that means we will be in this mess all over again.
If you are looking for a home that you will be in greater than two years, and hopefully for five or more years, then you should consider buying but only if you can afford to do so. By afford, I mean have minimum 10-20% to use as a down payment, have great credit so you get a good interest rate, and a stable job you aren’t worried about losing. If you are missing any of these key factors, don’t buy.
You are probably asking, why bother buying at all? Here’s why:
- You have to pay to live somewhere no matter what. Why pay off your landlords mortgage if you could be paying off your own?
- The United States Government allows you to deduct your interest payment on your mortgage from your taxes
- Over time, your home will appreciate. Even if you bought in the height of the market in 2004-2005 you will make money given time. Unfortunately people bought with ideas of selling much sooner than 5+ years and are now being hit. I do understand that some people bought with legitimate plans to live in a home for a longer period of time and circumstances changed but that is just what I call bad luck.
- Pride of ownership. It’s a great feeling to call a place home. It’s the American Dream.
What are my thoughts about buying now? The same as any other time. Do it for the right reasons. If you buy now will you be in better shape than people who bought 24-36 months ago? Absolutely! Prices have either come down or stayed flat so you are ahead of the game in terms of long term appreciation.
