Why would you want to buy a home in Silicon Valley? The real estate market has had some ups and downs since the peak pricing in about May of 2018. Home buyers are somewhat nervous, particularly first time home buyers. (Those who lived through the great recession or past downturns are less worried if they are planning to buy and hold.)
The Benefits of Home Ownership
- Good investment
Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment. A house offers leverage, and the possibility for appreciation in value over time (3 years minimum, preferably 5 – this is not a short term cash cow!). And, a home is an investment you can live in, even while it’s working for you! Stocks can literally go to zero value. A house does not do that: you still have the land.
- Tax benefits, such as mortgage interest deductions
The tax breaks of home ownership are substantial. First mortgages up to $750,000 are tax deductible.
- Accumulation of equity
Why keep throwing your money away on rent? (Silicon Valley rents are not cheap!) Why not build equity with that money, instead? Renting doesn’t protect you against rising housing prices. Rental units are just as susceptible as homes to increases in taxes, insurance, utilities and other costs. Landlords will pass these increases along to tenants.
- Control of housing costs
You decide what to spend on your home, and when to spend it. Repairs, improvements, changes-everything is up to you, and only you. Unlike renters, homeowners who secure a fixed-rate loan can lock in their monthly housing costs, and make prudent investment plans knowing these expenses will not increase substantially. Buying a home can be a hedge against inflation.
- Opportunity to make improvements on the property
No more futile daydreaming about that sundeck, or new bath, or exterior paint job. You can make any improvement on your own property that you wish, and you will be increasing your home’s value in the meantime!
- Pride of ownership
There’s nothing like owning your own home. And don’t think you have to wait to buy. You’re never too young to own! Figures from the National Association of Realtors show that the average age of first-time buyers is 32 years. We can discuss the number and variety of financing options available.
The waiting game is a losing game. Don’t put off buying a home thinking that prices will come down. If prices come down, the cost of a loan may go up and any perceived savings are lost.