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If you purchased your home for the right reasons, the recent decline in home values shouldn’t be of any concern!
I had an interesting conversation with a fellow alumni the other day. He had just graduated college and was eager to purchase a new home. He tells me that he was “sick and tired of throwing money away by renting”.
I tried not to laugh as the words were coming out of his mouth. The reality was that I had thought the same thing myself when I first graduated from college 9 years earlier. There is something infectious about the optimism of youth.
I shared with him my story of wanting to buy real estate when I was his age and how I laughed when I read that Rich Dad, Poor Dad author Robert Kiyosaki didn’t consider your primary home as an investment.
In hindsight, had I purchased a home when I first graduated college there is a good chance that I would have built up a substantial amount of equity with the run up in home prices over the last few years.
Unfortunately, today there are many individuals and families that bought their primary homes on speculation that home values would continue to advance. Now they have to face the reality of declining home values. Maintaining a steady job is hard enough, adding an additional element to your ability to pay for a house is unnecessary.
Kiyosaki’s point was never fully understood until recently. Your home should not be considered an asset. It shouldn’t matter if home prices are declining if you purchased your home for the right reasons. You will always need a place to live whether you own or rent.
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