What Matters When Buying

The one and only thing to think about when making your home buying decision.

We’ve gone over a lot of misconceptions about real estate at this point. Explained where they come from, dived into the reality that contradicts them, and then added some considerations on what to do or think now knowing about them. So then what really does matter when it comes to buying a home? What are some of the important factors that one may overlook when buying a home? And how does one make a better home buying decision?

Well of everything you could consider, there’s only one thing you need to think about. Yes, truly just one thing you need to consider. And that is, “how long do you think you’ll live in the same home for?” That’s it. Pretty Simple. Every other factor or circumstance that could impact you either boils down to how long you think you’ll live in the same home for, or is something that is unforeseeable and most likely outside of your hands. For example, “how many beds and baths does a home have?” probably boils down to whether or not it has enough space for you to grow into, until you grow out of it and need to move. For things that are unforseeable, you buy a home near your workplace, but then you’re let go. You have to find a new job, and the new job you get takes you all the way across town forcing you to move homes. You couldn’t predict when or how you were going to get laid off, but it happened and forced you to move. All of them fundamentally boil down to movement.

And moving is a good thing! We all move for so many good reasons! We move to go to school or to go back to school. We move for our first job, or a better job. We move for family planning purposes, to move in with significant others, or to start a family. There are so many good reasons for people to move. It’s just that moving too often isn’t the best for home owning. But why? Well it’s because the process of selling and buying a home every time you move is very costly. It could cost you anywhere from 8% to 15% of your homes value to move homes. Which for the average starter home price across the US being $240,000 that would be $19,200 to $36,000. Which is an expense you wouldn’t pay at all if you were renting and needed to move. That’s a very costly side effect of wanting to own a home.

Seeing that number, if you’re not grimacing like I am, then I’d be surprised. But buying and selling is just another cost that is part of owning and investing in a home. So if you’re home has been a good investment, then even after deducting the costs to sell your current home and buy your next, then you should be pocketing some money. But if it hasn’t been, then you may be eating some of that cost even possibly all of it. Scary huh? In hopes of avoiding this, the industry came up with the five year rule. While the situation can vary from person to person, the general rule of thumb is that if you’re going to buy a home, you’ll need to own your home for at least five years to break even, and not suffer from the above cost. So that’s it, just don’t move for 5 years and you're good! Simply enough right! And then the longer you stay past five years, then all the better your investment will do! So just never move again and your set!