Owning a home used to be the standard investment for retirement.You bought when you were in your'20s,then sold in your'60s.Forty years of steadily increasing value meant a nice chunk of money to reinvest and live off of when you stopped working.That was the American dream!Now it's more like the American nightmare.
Homeownership and the current economy
In this economy,people cannot be guaranteed that a new home will increase in value.In the US,there are still 16 million homes"under water" which means they have lost so much value that the mortgage is more than what the house is worth on the market.Homes may decrease in value even more as foreclosures threaten to further empty those neighborhoods.With this scenario,is buying a home a good investment anymore?Do potential or current homeowners have any reason to be confident?
I think a home is a good investment if you are young with a stable career and income.To buy young and sell old still seems like a good idea,if you can see that far into the future and have a lifelong plan.I am going to assume that a home's value will increase,slowly at first,but more steadily with time.
Benefits of homeownership,even in a bad economy
There are tax benefits to having a mortgage and a home.The interest is deductible,and you can get deductions and credits for energy efficient improvements.Greening your home is a good investment and also buffers you against today's unstable energy prices.
Most remodels these days include green improvements.The economy has forced people to give up fluff and get back to basics.They cut back on unnecessary purchases,they drive less,they are more frugal and they want their remodels to have a high ROI and save them money.By cutting back,they are examining their personal values and deciding to keep what will add to their lives and dismissing the extras.
Remodeling also creates a fresh feeling in an old space.I added a sunroom and changed the traffic pattern to the kids'bedrooms.I felt like I had a brand new house,and the money I borrowed was minimal to buying a different home.Remodeling for your current needs lets you stay in your house longer,which is important if you want it to appreciate as a retirement investment.
Changing values and practices of 21st century homeowners
Their concern for the environment also pushes them towards energy efficiency.Remodels save natural resources with renewable energy,a few strategically placed windows for passive solar heating,extra insulation,water saving fixtures,recycled materials and drought tolerant landscaping,all of which save money for the homeowner.These features also add value to the home,but homeowners need to be careful not to overbuild for the neighborhood.When the market corrects,they want to be able to get a return on their investment.
When people have the opportunity to sell and buy,they downsize.To save money and resources,they either move to smaller digs they renovate for their personal needs,or they are building smaller and more energy efficient homes.Extra rooms are becoming obsolete,and the kitchen/living area is getting more mainstream.Rooms are smaller and are multi-functional.This is definitely a consequence of the economy.
How to determine home values in the 21st century
Homeowners should talk to a real estate agent to find out what home values are in their area and find out what sort of amenities those homes have.They can talk to neighbors,see what their homes are like and find out what they are doing for upgrades.This connects them to the people they live near,too.It's neighborly!People love to talk about their homes!
Keeping our homes in good shape and remodeling with energy efficiency is the key to being stable in this economy.A home will still be a good investment.It may not have as high a return as we thought,say,ten years ago,but in time,it will serve you well in your retirement.
