Earlier I tried to answer the question Should I sell my house now that many homeowners are asking. It turns out that not everyone should be or deserves to be a home owner considering how expensive they are and with our low savings rate not many of us have the discipline to pay for them. In fact things have gotten so bad that many homeowners are thinking about abandoning their homes.
Paul Krugman, a top economist, writes in The New York Times, that there are several disadvantages to owning a home:
- Financial risk: It is a huge investment with someone else’s money and unless you are willing to destroy your credit history you are responsible for paying it.
- You get stuck: If you have a strong reason to stay in one town for a long time, once you own a home you are likely to miss out on job opportunities in high-growth areas simply because the cost of moving is so high, particularly as the distance grows.
- Cost of commuting: The most affordable homes are often away from where the jobs are. Imagine paying for gasoline for all that time in the car.
Indeed prices are at or near the bottom now but if you think this is a great time to buy a home, think about these issues.