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Myth: Buying a home is a risk-free investment!

Posted by admin on August 13, 2018
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While it’s true that real estate is, historically, a less volatile investment than stocks, it’s still an investment and that means there is some risk. It’s a gamble that usually pays off but not always. And we’re not just talking about those horror stories you see in the news about a couple buying a home sitting atop an enormous snake den or discovering the carpeting covered giant holes in the floor.

Buying a home is a particularly risky gamble for low-income families. If you’ve had to stretch to buy an inexpensive home in an inexpensive neighborhood, you are probably in real trouble if you lose your job. You’re less likely to have a financial cushion. And if you lost your job as part of a regional economic downturn, chances are you can’t just sell your house because your potential buyers are likely out of work too. That means you can’t move to where you might get another job.

In addition to the loss of flexibility, lower-income homeowners are less likely to benefit from the mortgage-interest tax deduction because they are less likely than more affluent taxpayers to file itemized tax returns.

Does that mean you have to be well-off to profit from owning your own home? Certainly not. But it does mean that you shouldn’t go into homeownership thinking that it’s going to give you an instant financial leg-up. Real estate is a good bet – if you can afford to make it.

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