After reading some articles regarding current American investment practices, I stumbled upon the above title of this blog post. I asked myself is buying Real Estate a better investment then buying gold? We’ve all seen the commercials asking us to go through our jewelry boxes and send jewelry to some random company in an hap hazard envelope most of us just turn the channel, but it got me wondering is there something we are missing?
Once a year Trulia puts out a an American Dream Survey asking Americans not banks or legislators about their investments their long term financial goals and what matters to them for future investments. The results as you can see in the image above point to homeowner ship as the most popular, historically stable, and a good savings plan for the future. There are many reasons why home purchases are and have been good long term investments but i only one to ouch on a few I think are the most important.
When I was growing up in Sacramento Valley in the 1980’s my parents had saved enough money to purchase a home, they had decided to stop renting a truly wonderful thing, I could finally have a pink room. The reason this was all possible was because of a few different factors one that my parents actually saved money by buying a home rather than renting and also because of FHA loans. Their first mortgage was cheaper than the rent they were paying, currently I am seeing that to be true even in Lake Tahoe. A year after they bought their first home the market fell about 10% it was a huge crash in for California Real Estate, but here was the difference my parents didn’t walk away from their home because the value fell, in fact they still own that house. Traditionally Home purchases were to buy a home live it in and then upgrade when your family grew or you got a promotion. The idea was to build on the initial investment.
If you purchase a home, a second home or investment property and you keep that investment over a long period of time you will be better off than most who never take the plunge. Buying a home is still a good investment for yourself and your family the above infographic is a perfect example of that. It has never been more affordable to purchase a home in today’s market with interest rates so low the payments are the same or lower than average rents. But don’t take my word for it just look at the folks who bought ocean front cottages in Santa Cruz 30 years ago for 50K that own multi million dollar real estate even in today’s market.