When Warren Buffet speaks, the volume on the TV goes up, phone calls are ignored and people weigh his comments pretty carefully. Recently, he said “[h]ome ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates.” He also said of home ownership,”the third best investment I ever made was the purchase of my home” (wedding rings being his number one and two best investments). His approach to home ownership is based on 3 basic steps.
1. Buy a home you can afford. What is better is to buy a home that makes sense for your family’s future and its finances. In other words, make sure your eyes aren’t bigger than your wallet.
2. Plan to hold. Buffet’s stock investing advice has long been to avoid making investments you can’t hold for at least 10 years. Likewise, buying a home should be done with a long-term plan to avoid catastrophe when home values fluctuate in the short term.
3. Fixed affordable mortgages. A good rule of thumb is to stick with a fixed mortgage payment (including taxes and insurance) that’s under 30 percent of your take home income.
From the number of real estate sales so far this year, people are taking his advice.
[image title=”Yearly Comparison of Sales in New Canaan, CT 2007-2011″ size=”large” id=”1346″ align=”none” ]