We
have reported
many times that the American Dream of homeownership is alive and well. The
personal reasons to own a home differ for each buyer, but there are many basic
similarities. Eric Belsky is the Managing Director of the Joint
Center of Housing Studies (JCHS) at Harvard University. He authored a
paper on homeownership titled - The Dream Lives On: The Future of
Homeownership in America. In his paper, Belsky reveals five financial
reasons why people should consider buying a home. 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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