The commerce department reports that construction on new homes dropped 11% in October, led by a sharp drop in construction of multifamily units, including condos and apartments.
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Economists don’t consider the data to be an omen or indication of a trend that the housing market is heading for trouble — other data indicates home buying is strong. The numbers are, however, food for thought, when it comes to the question of homeownership; more specifically: does it make sense for everybody?
Many of us are told that homeownership is the best path to lasting wealth from our parents and from society. There is no question that it is one of the smartest ways to build generational wealth, but just like all financial decisions, the choice to buy a home should be made within the context of your overall life goals. A survey by interest.com found that 1 in 4 people regret buying their home.
“Owning your own home is an integral part of the American Dream. Like every dream, however, it isn’t necessarily the right decision for everyone,†says Rick Kahler, president of Kahler Financial Group.
3 things to consider when determining whether you want to rent or buy:
- What can you afford? You should spend no more than 30% of your after-tax income on housing costs.
- How long do you plan to stay in your home? If you’re not there for at least 2 years, you may want to rent.
- Mobility. You may be at a stage in your life or your career where you want to be able to move to pursue opportunities.
If you do decide to rent, be sure you’re creating long-term financial security in the financial markets. “Long-term renting can be a wise choice when renting costs are substantially less than owning. It may make sense if you want to move to a beach area or big city. It also may make sense when you move frequently, or when you invest enough, to assure your financial independence,†says Kahler.