A recent New York Times article came to the defense of home ownership. It's true that home prices have come down almost everywhere from their 2006 highs. No matter what the "gloom and doom" media reports, there are informed people who study the situation and their needs and decide that buying is right for them. Reasons cited include:
- Low Prices and Low Interest Rates - One couple getting married soon had been investigating their options. With rates running around 4.5%, and an FHA mortgage, they'll be buying a condo in southern California. In 2006, they couldn't have afforded the purchase price or the higher interest rates.
- Forced Savings - Even though nobody expects home prices to ever go back to appreciation rates like those in the boom years, many do expect prices to begin to rise again after current foreclosure inventories are finally cleared. Inflation is expected to continue, and this puts upward pressure on labor and material prices, so homes will be more expensive to build.
- No Control as a Renter - A lender can't take your home unless you fail to pay the mortgage, but a landlord can kick you out at lease end for any reason, even if you want to stay. A 30 year fixed rate mortgage won't change in principal and interest payments, but rent can go up every year or more often.
- Desirable Areas - Some of the most desirable areas for lifestyle, schools and other amenities either don't allow renting, are very expensive for rentals, or just don't have many homes for rent. Getting into an area that brings a great lifestyle can be the kicker in a buying decision.
There are still buyers out there, and many have considered all of these factors in their decision to buy now.