3 bad reasons to buy a home

3 bad reasons to buy a home
By Liz Pulliam Weston

Fear stampeded a lot of people into buying a home during the recent real estate boom. Now we're seeing the even more fearsome fallout.
People who were terrified about being priced out of the real estate market are now horrified by their ever-rising mortgage payments. People who were afraid of missing out on the "easy money" of home-price appreciation are now anxiously realizing that what goes up can also come down.
Foreclosures are spiking. Sales and prices are stalling. Lenders are finally tightening up ridiculously loose lending standards, just at the point where many people are realizing they can't afford the mortgage they have and desperately need a new one.
Despite all of this, I still hear from people who are pressuring themselves into buying a house even when it's not something they necessarily want or need.
It's a fact that homeownership is a great way for most people to build wealth over time. But that doesn't mean everyone should be a homeowner. It's a bigger commitment and more expensive than most first-time buyers ever realize. You should have a clear idea of what you're getting into before you commit to 30 years of payments -- and you shouldn't let any of the following popular legends guide your decision.
'It's a good investment' Sometimes yes, sometimes no.
Nationally, home prices rose 50% between 2000 and 2005, and in more than 30 cities -- including San Diego, Los Angeles, Miami and Washington, D.C. -- prices doubled.
But that's not the norm. In the 30 prior years, from 1969 to 1999, the average appreciation for homes exceeded the inflation rate by a little more than 1 percentage point. Compare that to stocks, which bested inflation by 7 percentage points in the same period.
And appreciation isn't a given, as homeowners in Detroit, Santa Barbara, Calif., and Kokomo, Ind., are learning.