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Smart Money Experts say the dream of home ownership may be too pricey

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Kurt Bauschardt
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The real estate market is hot across the U.S., including in Kansas City. With limited home supply, price increases, and bidding wars, it's worth looking into whether buying or renting is better for you now.

The current market has people rethinking the dream of owning a home and, instead, exploring the tradeoffs between renting and buying a home.

Even in the current environment, financial advisor David Jackson thinks that despite the risks of the real estate market a house can be a positive in the long term.

"You're going to have to pay rent to somebody anyway so, you're basically paying it to yourself and building up that equity. Makes it a good investment" he says.

Nolan Keim, an associate wealth advisor, points out that if you purchased a house in 2011 for $300,000 and sold it this year for $450,000, you would see an annualized gain of about 4.14% over the 10 years.

However, during that same decade the S&P 500 was up 14.17% which according to Keim shows that, "if your main purpose is to live in that [house] long term, which in most cases it should be, it really falls under that personal use asset rather than that investment asset."

There are a number of myths when it comes to homebuying. The biggest is if the bank approves the mortgage you can afford it. The bank may only be looking at your income and not at all the expenses you may have.

Another myth is home ownership is more expensive than renting. On the whole that is true admits Keim but says there is worth in having more room in the home and the choice of neighborhood. "There is value in other things that you don't get while renting."

If you're thinking of purchasing a home, Jackson reminds prospective buyers, "If you're not going to be in a home for at least three to five years, with closing costs and moving expenses and all that, you may end up losing money on the deal," adding, "You have to think it all through."

The information presented by our guests is for informational purposes only and should not be construed as a recommendation or advice related to your personal situation. Please consult with a professional prior to making any financial decision.

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When I host Up To Date each morning at 9 a.m., my aim is to engage the community in conversations about the Kansas City area’s challenges, hopes and opportunities. I try to ask the questions that listeners want answered about the day’s most pressing issues and provide a place for residents to engage directly with newsmakers. My email is steve@kcur.org.
As senior producer of Up To Date, I want our listeners to hear familiar and new voices that shine light on the issues and challenges facing the myriad communities KCUR serves, and to expose our audiences to the wonderful and the creative in the Kansas City area. Just as important to me is an obligation to mentor the next generation of producers to ensure that the important conversations continue. Reach me at alexanderdk@kcur.org.
Reginald David is an assistant producer with Up To Date. You can reach him at reginalddavid@kcur.org.
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