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Add to
this a declining supply: the number of new apartments currently being
built in NYC is insufficient to replace the depleting housing stock of
obsolete apartments. New York is experiencing a net reduction in dwelling
units each year.
The conclusion is clear: even if everything
stayed the same and supply and demand were in balance, the effect of
inflation would naturally increase prices due to the leveraging effect of
borrowing. However, supply is not keeping up with demand, and incomes are
rising dramatically so the impact on prices is even more significant.
There's no question that real estate values go through economic
cycles. However, after every decline, prices have risen to more than they
were at the high point of the prior cycle. Few investments have as good a
long-term track record.
Issue 4: Life Objectives
Buying a home may be viewed as inconsistent with one's current
life objectives. Everyone has their own set of priorities. It's not
surprising that some people don't look upon home ownership as one of their
life objectives. The following are some key points these people should
consider:
A home is the epitome of security. It is the one place where you can
feel safe from outside pressures and influences. In terms of personal
growth and development, homeownership is frequently considered the "next
step."
For most people, a home is the best financial investment they will
ever make, one which will provide their greatest source of wealth
accumulation.
Many banks prefer to lend to homeowners rather
than renters, because the real estate they own represents a significant
and tangible asset which is valuable security. Presently, accounting
rules require that the value of your home be listed on your personal
financial statement at its current fair market value rather than its
initial cost. This means that your home is accumulating tangible wealth
in the form of increased creditworthiness without your having to sell
it.
Home ownership provides many benefits beyond the obvious. If you believe
home ownership is inconsistent with your life objectives, it is probably
because you are not looking at all the possible opportunities owning
a cooperative or condominium apartment can offer.
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