Five reasons why buying a house is still a smart move

House for saleBack in the dark ages when I took my first job out of college at the Sun Sentinel newspaper in Fort Lauderdale, Fla., I rented an apartment on the Intracoastal Waterway in the city. Its owners decided to convert to condominiums and offered me a deal to buy in -- $20,000 for a two bedroom. My dad was over the moon. "Buy it quick," he told me. "I'll give you the down payment."

I was 21 and a know-it-all. "What would I do with it?" I asked him, rolling my eyes. "I don't want to own anything," I said firmly.

Last year, I drove past the place. The units were selling for about $1 million - even after the real estate downturn. I said a little prayer to God and my dad, who I'm sure is up there close by, asking for forgiveness for being so stupid and letting an amazing opportunity pass me by.

Although the seemingly endless run of bad housing news is discouraging some potential home buyers, the truth is that the advantages of home ownership have not disappeared. They still include the likelihood that as the population rises, real estate in attractive locations will increase in value.

These numbers are the historical percentage of increase in home values. They are derived from Yale economist Robert J. Shiller's Irrational Exuberance:

1890's: 0.53%
1900's: 1.40%
1910's: 3.30%
1920's: (-0.70%)
1930's: (-0.45%)
1940's: 8.16%
1950's: 2.67%
1960's: 2.57%
1970's: 8.12%
1980's: 5.86%
1990's: 2.84%
2000's: 9.27%

Even if you think the future will be different, buying is still a great way to go. The best things about owning a home have a lot more to do with personal comfort and satisfaction than profit. A recent story in the New York Times emphasizes that. For these home buyers, making a windfall from their purchase was the last thing on the minds.

Here are five reasons why owning your own home can make your life better.
  1. You are your own landlord. If you want to paint the walls pink and green, feel free. There are no penalties for hanging pictures. You decide when it is time to move.
  2. Paying the principal is forced savings. Those who say renting is a better deal always point to the opportunity to take what you don't spend on the house and put it in a savings account. How many people actually do that?
  3. Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in terrific bargains.
  4. Good schools. The best school systems are supported by owner-occupants who are willing to pay substantial taxes. These same people are involved in the schools and push to make sure their kids get the very best education.
  5. Spacious properties in pleasant neighborhoods. Sure, you can find a four-bedroom rental, but they aren't a dime a dozen. Family-sized homes in attractive communities are almost always owner-occupied -- not rentals.
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