RENEE MONTAGNE, Host:
On Fridays, we talk about your money. And today we always hear that real estate is the best investment, but is that true now? Yesterday, Federal Reserve Chairman Ben Bernanke told lawmakers that the housing slump will intensify. To hear what that means for people thinking about buying, we called Shira Boss. She's author of a book on financial hardship, a regular guest on this program.
SHIRA BOSS: Good morning.
MONTAGNE: Do plummeting housing prices mean that this is a good time to buy a first house? It's certainly a temptation.
BOSS: It is, you know, and nobody really knows where we are on the curve. It could be a little bit cheaper now, or it could be getting cheaper for the next five or six years. You really don't know. So you really need to look at your individual situation and not really rush and try to time the market. You know, it's like the stock market, you can't time that either. So you need to look at your individual situation and make a decision based on that.
MONTAGNE: Why don't you break down, briefly, the kind of various situations people might be in? For instance, who would be in a situation where it would really be better to keep renting?
BOSS: Going back to the old-fashioned saving 10 to 20 percent downpayment is going to be your first step. So you shouldn't even look at houses until you have that kind of downpayment. In terms of your situation, you know, it depends on what kind of job you have, how stable is your job, what field are you, and how likely are you to be relocated.
MONTAGNE: Is it important for some people to have the flexibility of renting?
BOSS: Absolutely. That's - you know, friends of mine bought a house and had it for less than a year, and he got laid off and spent months job searching, and this week accepted a new job in another city. And next week their house is going on the market. So...
MONTAGNE: And they're stuck probably.
BOSS: It's not a great time. It hasn't appreciated. And you know, selling a house is more expensive than buying it, so you need to cover clothing costs and the cost of maybe holding it for a few months while it sells. So that can be a sticky situation. And it's a good one for people to think about because, you know, it addresses this idea that real estate is not a sure thing in terms of, you know, easy and quick profit and you'll never go wrong. I mean, there are situations where you can be stuck and lose money.
MONTAGNE: It does seem counterintuitive, though, to imagine that real estate wouldn't be a good investment. I mean, I've actually heard that for some people it's better to rent your whole life.
BOSS: And it's not just the things that you need to maintain and fix if they're broken, but you want to upgrade and you want to keep your landscaping super nice. So you end up either spending or tempted to spend a lot more money when you own, and you know, that's something a lot of people don't take into account when they think about owning.
MONTAGNE: There is a U.S. census figure on homeownership that a lot of people might find a little bit surprising. One in four people who are under the age of 25 own a home. Do you think there's pressure to get into the game of homeownership, or has been?
BOSS: And you can get into this kind of panic attack when you're young about having to buy. And I think that's incorrect because it's not necessarily something everybody can do or everybody should do, and that we should kind of relax and not push people into real estate as something they have to do.
MONTAGNE: Thank you very much for joining us.
BOSS: Thank you.
MONTAGNE: Shira Boss is author of "Green with Envy: A Whole New Way to Look at Financial (Un)Happiness." At npr.org, you can read how one Florida couple got in over their heads when they bought a house beyond their means.
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