Buying a home is a critical financial decision. Don’t let fears block out the perks

One of the biggest financial decisions you will make in your life is the purchase of a home. It should be an exciting time, but the event is often clouded by stressful thoughts. These questions are likely on your mind: “Am I making the right financial decision?” “Am I making a large enough down payment?” “What new responsibilities am I going to have?” And the list goes on.

On top of these daunting thoughts, you’ll likely be bombarded with third-party opinions. These might include, “Now is an awful time to buy a house because interest rates are too high,” or, “The housing market is only going to get more expensive, so it’s a great return on investment due to the housing supply shortage.”

If you’re considering purchasing your first home or are looking to upgrade to one that is larger, you will likely spend a lot more time thinking about the potential headaches that come with the purchase than the potential upsides. These worries could include replacing a roof, remodeling costs or ongoing maintenance. In this article we will cover why the decision to purchase a home in today’s market likely won’t jeopardize your financial future.

According to data compiled by real estate company Redfin, the housing market in Kansas City and the surrounding areas is continuing to see the median sale price of single-family homes trend toward all-time highs.

A variety of factors have contributed to these higher sale prices:

▪ Supply: Housing, especially entry-level homes, has been materially underbuilt for roughly the past 15 years, helping to create a supply shortage.

▪ Demand: We have seen a large uptick in demand due to the exodus from big cities to suburban life during the pandemic, which inspired the work-from-home movement.

▪ Rates: The low-interest-rate environment we have seen for the last several years has increased the appetite from investors to snatch up single-family homes as an attractive long-term investment.

Now that we understand the current market and how we got here, let’s cover a few reasons why purchasing a home in today’s market likely won’t jeopardize your financial future.

Consider the following reasons purchasing a home can be advantageous:

▪ Equity building: Unlike rent, which offers no return, mortgage payments contribute to homeownership and asset accumulation.

▪ Refinancing opportunities: Although current mortgage rates are the highest in decades, historical trends suggest the possibility of refinancing at a lower rate in the near future.

▪ Appreciation potential: Over time, a well-maintained home in a strong market may appreciate in value, potentially selling for more than the purchase price.

Although it’s easy to focus on the financial components of buying a home there are plenty of non-financial advantages as well. These include:

▪ Privacy: Homes can provide peace and quiet, unlike the close quarters of apartment living.

▪ Space: Owning a home generally means more room for family, friends and potentially a home office.

▪ Freedom: Homeowners enjoy the ability to customize their living space and choose the types of upgrades or new amenities they’d like to enjoy.

The home-buying process should be a fun and exciting time. Don’t let today’s market conditions, unsolicited third-party opinions or your own worries ruin this experience for you.

If you have done your research, crunched the numbers and are still unsure whether purchasing a home is the right decision, partner with a trusted financial planner to help you navigate one of the biggest financial decisions in your life.

Jack Giardino is a CERTIFIED FINANCIAL PLANNER professional and co-director of public awareness with the Financial Planning Association of Greater Kansas City. He serves as an advisor and director of Planning for Inflection Point Wealth Advice in Overland Park.