Thanks to the federal homebuyer tax credit, apartment communities may see some of their most financially responsible residents leaving to buy their first homes. Remind them that buying a house doesn’t just mean an end to monthly rent payments and noisy neighbors. Here are five common myths associated with owning a home. Leasing professionals can use these myths to help convince residents to renew:
1. Housing is a great long-term investment.
Joseph Gyourko, Chairman of the Real Estate Department and Director of the Zell/Lurie Real Estate Center at the University of Pennsylvania’s Wharton School, writes, “Between 1975 and 2008, the price for houses of comparable quality and size appreciated an average of about 1 percent per year after inflation. You would have earned well over 2 percent per year after inflation had you invested in Treasury bills over the same period. And you may have earned even more on riskier investments.”
2. The federal homebuyer tax credit makes buying a house more affordable.
Gyourko states, “Just because you got an $8,000 tax credit toward the purchase of a home doesn’t mean that you actually saved $8,000. In areas where there is strong demand for housing and the supply of new housing is limited—including the Washington, D.C. metro region—tax credits being available may result in the bidding up of home prices.”
3. Homeownership is good for society because owners make better citizens.
Gyourko insists that there is no overwhelming evidence that higher homeownership rates create better societies. Three European countries—Austria, Germany and Denmark—all have ownership rates in the low 40 percent range. This is well below the 68 percent ownership rate in the United States, he points out, “but those countries don’t appear to be suffering a shortage of civic-mindedness.”
4. Homeownership creates a sense of security.
In fact, homeowners can see their careers affected by not being able to move. Gyourko writes, “One of the great virtues of American society has long been our willingness to relocate and follow opportunity. But now, many families are going to be stuck in declining parts of the country, unable to take advantage of better labor market conditions elsewhere.”
5. Owning a home is cheaper than renting.
Money homeowners have to spend on maintenance and upkeep eliminates a lot of that savings.
Sources: The Washington Post (11/15/09) and NAA’s Industry Insider