Buyinga home requires an individual or a family to incur one of the biggestsingle expenses within a lifetime. It is both a big risk or gamble as well as alarge investment. Risk, as in any adverse event, such as losing a job or anycircumstance that leads to one’s failure to pay the mortgage, can jeopardizethe project. Obviously, it is a potentially good investment as it gains value intime from which an owner can gain equity or take out a loan from -- or monetizecompletely through selling at a profit. While some persons may not need ornever avail of such benefits from owning a home due to certain principles orqualms, building one’s personal worth or credit level can come as a greatadvantage in the present economic conditions.
Moreover, one can look at owning ahome as a kind of forced savings since regular monthly payments can be equatedinto imaginary inputs into a virtual savings account from which one canwithdraw at any time, partially or as a whole. This unique feature of aresidential building which most of us see simply as a physical domicile, infact, serves as a great source of economic opportunities for a nation. Inrecent times, we have seen how home mortgages have been used to providesignificant wealth to people who were engaged in the stock markets in order tobenefit their corporations at the expense of homeowners and other investors.
In effect, residential housingcontributes to a nation’s GDP (Gross Domestic Product) through residentialfixed investment (meaning, new building construction and improvements)and personal consumption expenditure (referring to various housing services,such as gross rents paid, etc.). Residential fixed investment (or RFI) providesa measure for homebuilding and remodeling’s contribution to the GDP.
Investment in homebuilding hashistorically shared an average contribution of 5% of the GDP although in 2010it was down to 2.5%. Housing services,on the other hand, averaged from 12 to 13%.
So, next time you think of writing acheck to pay the rent or the mortgage for your home, you need to realize thatyou are not getting poorer for it but enriching yourself as well as the wholenation.