Buying a home is a big decision for anyone. For most people, it will be the single largest purchase they make during their lives. If they obtain a 30-year mortgage for the purchase, it is also likely to be the longest term purchase. Residential real estate has had its ups and downs during the last 15 years, with significant appreciation followed by the massive collapse of the market during the Great Recession.
This has led to a tightening of lending requirements from banks and a fair amount of caution by many of those who in prior eras would have almost reflexively purchased a home. Some housing markets have fared better than others and a recent study attempts to score the overall value of purchasing a home. They then ranked the markets from best to worst.
The good news for homeowners and those considering home ownership in the Minneapolis/St. Paul region is that we were ranked fifth overall on the survey by Bankrate.com of 50 metro areas.
The rankings looked at various factors, such as property taxes, property insurance rates, maintenance costs, energy costs, foreclosures, appreciation rates, rent hedging and affordability. Of course, some of these factors may be more important than others depending on your needs.
For instance, if you plan to live in a home for the full term of your mortgage, you may be more interested in maintenance and energy costs than you would be in foreclosure rates or rent hedging. The long-term costs of ownership will be more significant in your decision to purchase, as they could be quite large during that time in the home.
But if you have a job that may demand frequent relocations, long-term costs are probably less important and factors that affect resale may become more significant. If rents are stable, it may be more cost effective to rent rather than buy.
Surveys like this are useful, in that they identify general trends that support home ownership in the Twin Cities area, but with a purchase of this magnitude, you should do all of your own due diligence, including legal guidance with some aspects of the purchase, before you decide to buy