It's been reported many
times that the American Dream of homeownership is alive and well. The personal reasons
to own differ for each buyer, with many basic similarities. Eric Belsky, the Managing Director of the Joint Center of Housing Studies at
Harvard University expanded on the top 5 financial benefits of
homeownership in his paper -The
Dream Lives On: the Future of Homeownership in America. Here are
the five reasons, each followed by an excerpt from the study:
1.) Housing is
typically the one leveraged investment available.
“Few households are interested in borrowing money to buy stocks
and bonds and few lenders are willing to lend them the money. As a result,
homeownership allows households to amplify any appreciation on the value of
their homes by a leverage factor. Even a hefty 20 percent down payment results
in a leverage factor of five so that every percentage point rise in the value
of the home is a 5 percent return on their equity. With many buyers putting 10
percent or less down, their leverage factor is 10 or more.”
2.) You're paying for
housing whether you own or rent.
“Homeowners pay debt service to pay down their own principal
while households that rent pay down the principal of a landlord.”
3.) Owning is usually
a form of “forced savings”.
“Since many people have trouble saving and have to make a
housing payment one way or the other, owning a home can overcome people’s
tendency to defer savings to another day.”
4.) There are
substantial tax benefits to owning.
“Homeowners are able to deduct mortgage interest and property
taxes from income...On top of all this, capital gains up to $250,000 are
excluded from income for single filers and up to $500,000 for married couples
if they sell their homes for a gain.”
5.) Owning is a hedge
against inflation.
“Housing costs and rents have tended over most time periods to
go up at or higher than the rate of inflation, making owning an attractive
proposition.”
Bottom Line
We realize that homeownership makes sense for
many Americans for an assortment of social and family reasons. It also makes
sense financially. If you are considering a purchase this year, contact a local
professional who can help evaluate your ability to do so. Looking to Buy, Sell, or Invest? Contact:
David Demangos
858.232.8410
Locally Known, Globally Connected
Luxury Home Marketing Specialist
Global Property Specialist
David@AwesomeSanDiegoRealEstate.com
Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!
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