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Recent Articles : Is Your Home Like
Your Car?
First of all, like many things in American life, supply and demand
is a major factor. Therefore, if your home is truly "unique"
it will always fetch a value for unique homes. Less supply and high
demand equals a higher price. Unfortunately, since most of us do
not live in unique homes, our property values will only rise based
on a few circumstances:
1. Simple inflation: Just like in the late 70's and early 80's
homes increased substantially because of inflation where everything
was going up more than 10% a year.
2. Sometimes we luck out and end up living in an area or development
that is perceived as "hot" and therefore demand far exceeds
supply.
3. If we stay in our homes long enough, the simple replacement
value will in all likelihood exceed the original cost of our home.
Factors of course that lend to a home being unique are water views,
such as living on the beach or a large lake, or living on a golf
course.
On the flip side, many homes in fact will depreciate in part over
time unless they are impeccable maintained. For example, most equipment
used to run the home such as air conditioners, refrigerators, water
heaters, outdoor ceiling fans, swimming pools, and their pumps,
will wear out over time and will require replacement. Thus, certain
portions of the home will indeed depreciate. The same also holds
true for the structure. The roof needs to be regularly cleaned and
eventually replaced. The outside of the house needs to be kept painted
and flooring and wall treatments need also to be maintained and
also eventually replaced.
Also, if developers continue to build a similar house in your area
their pricing will obviously affect the value of your home. If their
prices are going up, your will likely to.
Putting it simply, strictly as an investment, buying a home may
not be your best investment. In fact, the average American family
has now more money invested in stocks and bonds then they do in
the equity of their home.
So again what does this all come down to. It's very simple. When
you're buying a home, do so because you want to create a certain
lifestyle and comfort level for you and your family. Buy a home
because it is a safe place to place your money since in Florida
your judgment creditors generally will not be able to attach the
equity in your home if it is indeed your homestead.
If inflation rears its head again, you will have a good hedge to
protect the real value of the money you put in your house. Of course,
if you purchase your home with a mortgage, each monthly payment
you make is effectively a form of forced savings since, initially
a small portion , but later a larger portion of your payment will
go towards building up equity in your home.
Finally, if you sell your home and the value has not increased
remember, the house has created both psychological and economic
value to you in that you have, just like a car, enjoyed the use
of the house.
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