Should buying a house be the American dream?

One dream that many people have is to buy their own home. Maybe even a backyard with a fence it? Or, one with a great view of the mountains, and a hot tub where you can look out at the stars every night? Now, you're talking. Buying a house has been the American dream for quite some time now. And since 2008 and 2020, we are inundated with how much home prices have risen. Maybe I'm the only one that hears "If only you'd purchased a home back then." And why? Why has real estate become so popular? Why is it everyone's dream to own real estate? And if one house isn't enough, we all hear about that one real estate investor on Instagram with 10, 20 even 50+ pieces of property trying you sell you the next get rich course. What's all this commotion about?

Real estate is no doubt an incredible asset class. It has amassed fortunes for plenty of people over the years especially in high cost of living areas. Real estate represents stability and shows tangible success of the American Dream. What about all the down sides? Owning a house can be financial burden. Aside from closing costs, loan origination fees, brokerage commission fees,  and the down-payment, this can be a lot of money to fork over at one time. Not to mention, the real estate you own can tie you down to an area for years. I don't want to give off the wrong impression that owning real estate shouldn't be your goal. Because at the end of the day, owning any asset class, be it real estate, stocks, or bonds is going help propel you towards your financial goals. But, I do want to call out that to any investment situation there are pro's and con's that need to be heavily weighed. I also want to encourage renters out there to not give up hope. Renting can be a wonderful financial option because it affords someone flexibility. Look at it this way: when you rent, there is a cap on how much you will you pay. You pay your rent and your utilities. That's it! When something goes wrong with the house, you have the benefit of calling up your landlord to come fix it. When you own property on the other hand, the mortgage you pay is a price floor. In other words, if something goes wrong, you are responsible for fixing it. Your mortgage payment can easily double or triple if the property has some underlying issues. And for most missed mortgage payments (barring your lender doesn't offer a grace period), you are now faced with a missed payment penalty. 

My two cents: As with every financial decision, take a moment and look at the pros and cons of the situation, especially when considering purchasing a home. There is not one investment that does not have it's downsides. If you are considering buying a home, I recommended your mortgage be between 25-30% of your gross income. I also recommended thinking about how long you plan to live in the house. There's a lot of data out there to support that you will breakeven after 5-10 years. At bare minimum, I recommended to live in the home for at least two years to be able to exclude some or all of the tax that would be owed on the profit. If you're curious more about the tax rule, please visit: https://www.irs.gov/taxtopics/tc701. One final recommendation is to make sure your emergency fund is built and you have also accounted for miscellaneous home costs that might creep up on you after purchase.