Everyone knows housing has historically been cyclical with good money to be made during the boom cycles and often financial calamity during the bust years. Whether housing appreciation is driven by steady demand, hyper-inflation or ultra-easy liquidity (e.g., stated income loans, teaser adjustable rate debt qualifying, etc.), it can make home ownership seem like a great investment ... or a huge mistake when the tide turns. Having previously survived a boom-to-bust period myself, I know first hand that a home should be more than an investment in of itself. It must serve a purpose in my life beyond helping my net worth stair-step to the financial stratosphere.
When I purchased my first single family home in June 1989 in the Bay Area only to have the housing market peak a few months thereafter I was seeing stars - and, not the ones I thought I would see having joined the ranks of homeownership. It took nine years for my property to recover it's original purchase price and that's not including the years of sweat equity and the mountain of Home Depot receipts I accumulated along the way. It was certainly nice that I didn't lose too much on my first home purchase once I sold but unfortunately there are many that do.
So, if everyone can take a step back and simply view a home beyond investment terms ... as something that provides shelter, safety, freedom, comfort, personal choice, privacy, security, a sense of belonging and identity, then it's time to realize it's true worth. Think of it in terms of utility value ... what you get out of it on a truly personal level that can either enhance your lifestyle or set you back. Think long term as well and buy something that doesn't keep you married to the mortgage owed to the bank. After all, you want to be the owner not simply the mortgagor. The more the bank has invested in your home (via debt you owe) technically the less you "own" of it.
Now's the time to be thinking of homeownership for what it's really meant to be. Think of all the emotional benefits rather than any potential financial outcome. Given that perspective, homeownership is a smart choice.
