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Why Owning a Home is Part of the American Dream

You’ve heard it all before.  Owning a home is a good investment.  Owning a home is a way to secure retirement income.  Owning a home solidifies your position among the middle class.  Statements such as these are common, but many of them have been abruptly repudiated in the past few years, courtesy of the most severe economic downturn since the Great Depression.

Though some economists now question home ownership as a source of financial value, most Americans haven’t given up.  Check out a few of the most popular reasons why owning a home is part of the American dream.

It’s an investment.  All property carries value.  Cars, boats, hair dryers, stuffed toys, and washing machines all carry value.  But homes and land carry a different kind of value than any of these.  Real estate is considered an investment, a distinction shared by few consumer products.  It’s an investment because, roughly speaking, it tends to increase in value over time.

This is true of many financial products, but real estate is a tangible product, not a financial one.  Few other tangible items share this characteristic, with the exception of some alcoholic beverages, musical instruments, and works of art.  Real estate carries this potential to increase in value because there is a finite amount of it.  The money you put into your home will likely stay there and will, in fact, probably grow over the years.

With the financial marketplace in its present state, many economists claim the investment aspect of homeownership is no longer valid, citing recent cases in which average American homeowners have lost hundreds of thousands of dollars of equity.  It’s true that many homeowners are underwater.

But if you treat your home as a long term investment, you will likely gain significant returns on the money you apply to purchase it.  There is little doubt about this.  There’s debate as to whether you’ll get higher returns as a homeowner or as a private investor, but a home is still a solid long term investment, and on a long enough timeline, buying is better than renting.

Living space.  This is the most basic, fundamental reason anyone buys a home.  A home is a place to live.  Almost without fail, the average living space provided by a home you own is significantly greater than the average living space provided by a home you rent.  Most renters live in rental communities or on multifamily properties.  Most home owners live on plots of land in suburban areas with yards and more square feet of living space.

This has led to the conclusion that families need homes.  Even those who believe homes make poor investments agree that they're great for families.  You’ll hear economists say, “Don’t buy a home, unless you have a family and you need the space.”  Homes represent and foster family stability and permanence.  No one doubts this.  Though it‘s true you can rent anything you can buy, a home purchase is still the most common way to move your family into the living space needed to grow and flourish.

Personal freedom.  This is perhaps the core reason why owning a home is part of the American dream.  Beginning in the turbulent early years of this nation, ownership of property was tied to financial opportunity, social status, and the right to vote.  As development spread westward to the Pacific, the Homestead Act of 1862 created the patriotic image of pioneering settlers staking solitary claims against the wilderness on which to build their lives and raise their families.  This theme is deeply rooted in the mythos of American culture.

Owning a home has always represented success and stability.  It also represents liberty.  Many homebuyers continue to feel the pull of this great American promise and consider homeownership a given, a simple fundamental fact of life.  In truth, owning property is an expensive privilege not common in many parts of the world that has been made possible by centuries of economic success in developed nations.  The opportunity to enter this marketplace is alluring.

These reasons help explain why home ownership has gained its esteemed position, but is owning a home still a viable financial decision in today’s market?  You’ll have to make this decision for yourself.  Use our mortgage calculator to track your expected monthly payments or find a lender to discuss your options.

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