San Diego Real Estate Expert: financial benefits of homeownership

Showing posts with label financial benefits of homeownership. Show all posts

Thursday, July 7, 2022

Is Homeownership Still the American Dream?

Defining the American dream is personal, and no one individual will have the same definition as another. But the feelings it brings about – success, freedom, and a sense of prosperity – are universal. That’s why, for many people, homeownership remains a key part of the American dream. Your home is your stake in the community, a strong financial investment, and an achievement to be proud of.

A recent survey from Bankrate asked respondents to rank achievements as indicators of financial success, and the responses prove that owning a home is still important to so many Americans today (see graph below):

As the graph shows, homeownership ranks above other significant milestones, including retirement, having a successful career, and earning a college degree.

That could be because owning a home is a significant wealth-building tool and provides meaningful financial stability. The National Association of Realtors (NAR) explains:

“Homeownership builds financial security. With 65.5% of Americans owning homes, the net worth of a typical homeowner is nearly 40 times the net worth of a non-owner.”

There are other ways your home acts as more than just a roof over your head, too. The Mortgage Reports highlights a few of the many benefits homeowners enjoy, including:Your equity (and wealth) grows through home price appreciation.

Your housing costs are fixed – and that can help combat rising costs from inflation.
You’ll have greater privacy and the opportunity to customize your living space.

Plus, homeowners tend to be more active in their community. Like NAR says:

“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”

What Does That Mean for You?

If your definition of the American Dream involves greater freedom and prosperity, then homeownership could play a major role in helping you achieve that dream. When you set out to buy, know there are incredible benefits waiting for you at the end of your journey. You’ll have a place you can call your own, feel most comfortable, and grow your wealth.

First American puts it best, saying:

“Homeownership remains central to the pursuit of the American Dream. It is a critical driver of economic mobility, delivering financial and social advantages. . . .”

Bottom Line

Buying a home is a powerful decision and a key part of the American Dream. And if homeownership is part of your personal dreams this year, let’s connect and start the process today.

Looking to Buy, Sell, or Invest? Contact:

David Demangos - eXp Realty
Cell: 858.232.8410 | Realtor® DRE# 01905183
www.AwesomeSanDiegoRealEstate.com
We Go to Extremes to Fulfill Real Estate Dreams!

San Diego Real Estate Expert | Global Property Specialist
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2016, 2017, 2018,2019,2020,& 2021 Recognition of Excellence Award Winner SDAR

Sunday, June 5, 2022

How Homeownership Impacts You

June is National Homeownership Month, and it’s the perfect time to reflect on how impactful owning a home can truly be. When you purchase a house, it becomes more than just a space you occupy. It’s your stake in the community, an investment, and a place you can put your stamp on.

If you’re thinking about buying a home this year, here are some of the benefits you’ll experience when you do.

The Emotional Benefits of Homeownership

Because it’s a place that’s uniquely yours, owning a home can give you a sense of pride and happiness in several ways.
Your Home Can Reflect Your Tastes and Personality

Investopedia puts it like this:

“One often-cited benefit of homeownership is the knowledge that you own your little corner of the world.”

That knowledge can lead to a powerful, emotional connection to the place where you live. But so can the realization that your home will grow with you. Because it’s yours, you have the freedom to make updates to it as your needs and tastes change. As Logan Mohtashami, Lead Analyst for HousingWire, says:

“The psychology is that this is yours and you’re going to make it as good as possible because you’re in for a long time, . . . “

And that can create a greater sense of ownership, pride, and connection with your home and your community.

It Can Enhance Your Neighborhood and Civic Engagement

Homeownership can lead you to get even more involved with your local area. After all, you’re putting your roots down in a location and will want to do what you can to help improve it, much like your home. In a recent report, the National Association of Realtors (NAR) says:

“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”

The Financial Benefits of Homeownership

When you choose to become a homeowner, you’re making a financial decision as well. That’s because your home is also an investment.

It Can Help You Feel Financially Stable

Homeownership is truly one of the best ways to improve your long-term financial position. Not only will you have a predictable monthly housing expense that can benefit your budget in the short term, but you’ll also gain equity as your home appreciates in value and you make your monthly mortgage payment. As Freddie Mac says:

“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

It Can Grow Your Wealth

Because of your growing equity, you can build your net worth as a homeowner. And when you compare the difference in net worth between a renter and a homeowner, it’s clear that owning a home truly offers a great way to build your long-term financial position.

According to the latest data from NAR, the median household net worth of a homeowner is roughly $300,000, while the median net worth of renters is only about $8,000. That means a homeowner’s net worth is nearly 40 times that of a renter.

Bottom Line

Homeownership is truly a way to find greater satisfaction and happiness and to build financial freedom. If National Homeownership Month has you dreaming about purchasing a home, then let’s connect to begin the process today.

Looking to Buy, Sell, or Invest? Contact:

Sunday, February 20, 2022

Don’t Let Student Loans Delay Your Homeownership Dreams

If you’re looking to buy a home, you may be wondering how your student loan debt could impact those plans. Do you have to wait until you’ve paid off your student loans before you can buy your first home? Or could you qualify for a home loan with that debt?

To give you the answers you’re searching for, let’s take a look at what recent data shows. That way, you know what to expect and what to do next to achieve your dream of becoming a homeowner. While everyone’s situation is unique, your goal may be more within your reach than you realize.

Do you have to delay your plans because of student loans?

If you’re worried your student loans mean you have to put your homeownership goals on hold, you’re not alone. In fact, many first-time buyers believe they have to delay their plans. According to data from the National Association of Realtors (NAR):

“When asked specifically about purchasing a home, half of nonhomeowners say student loan debt is delaying them from purchasing a home (51%).”

When asked why their student loans are putting their plans on the back burner, three key themes emerged:

47% say their student loans make it harder to save for a down payment
45% say they think they can’t qualify for a home loan because of existing debt
43% say they believe the delay is necessary even though they’ve never applied for a mortgage

No matter which reason resonates most with you, you should know a delay may not be necessary. Here’s why.

Can you qualify for a home loan if you have student loans?

In the same NAR report, data shows many current homeowners have student loan debt themselves:

“Nearly one-quarter of all home buyers, and 37% of first-time buyers, had student debt, with a typical amount of $30,000.”

That means other people in a similar situation were able to qualify for and buy a home even though they also had student loan debt. You may be able to do the same, especially if you have a steady source of income. Apartment Therapy drives this point home:

“. . . buying a home with student loans is possible, experts say. The proof is in the numbers, too: Some 40 percent of first-time homebuyers have student loan debt, according to the NAR study.”

The key takeaway is, for many people, homeownership is achievable even with student loans.

The best way to make a decision about your goals and next steps is to talk to the professionals. A real estate advisor can walk you through your specific situation, your options, and what has worked for other buyers like you. They can also connect you with other professionals in the industry who can help. You don’t have to figure this out on your own – lean on the experts so you have the information you need to make an informed, confident decision.

Bottom Line

Many other buyers with student loan debt are already achieving their homeownership dreams. Maybe it’s time to take the next step toward making yours a reality. Let’s connect to discuss your options and find out how close you are to achieving your goal.

Looking to Buy, Sell, or Invest? Contact:

Sunday, September 12, 2021

What You Can Do Right Now To Prepare for Homeownership

As rent prices continue to soar, many renters want to know what they can do to get ready to buy their first home. According to recent data from ApartmentList.com:

“The first half of 2021 has seen the fastest growth in rent prices since the start of our estimates in 2017. Our national rent index has increased by 11.4 percent since January . . . .”

Those rising rental costs may make it seem impossible to prepare for homeownership if you’re a renter. But the truth is, there are ways you can – and should – prepare to purchase your first home. Here’s some expert advice on what to do if you’re ready to learn more about how to escape rising rents.

Start Saving – Even Small Amounts – Now

Experts agree, setting aside what you can – even smaller amounts of money – into a dedicated savings account is a great starting point when it comes to saving for a down payment. As Cindy Zuniga-Sanchez, Founder of Zero-Based Budget Coaching LLC, says:

“I recommend saving for a home in a ‘sinking fund’ . . . . This is a savings account separate from your emergency fund that you use to save for a short or mid-term expense.”

Zuniga-Sanchez adds saving in smaller increments can help make a large goal – such as saving for a down payment –achievable:

“Breaking up your goals into smaller bite-sized pieces by saving incrementally can make a large daunting number more manageable.”

Assess Your Finances and Work on Your Credit

Another tip experts recommend: take a look at your overall finances and credit score and find ways to reduce your debt. According to the HUD, the average credit score of first-time homebuyers is 716. If you’re not sure what your credit score is, there are numerous online tools that can help you check. If your score is below that average, don’t fret. Remember that an average means there are homeowners with credit scores both above and below that threshold.

If you find out your score is below the average, there are several ways to improve your credit before you apply for a loan. HUD recommends reducing your debt as much as you can, paying your bills on time, and using your credit card responsibly.

Start the Conversation with Your Advisor Today

Finally, it’s important to talk to someone who understands the market and what it takes to become a first-time homebuyer. That’s where we come in. A trusted advisor can help you navigate your specific market and talk you through all the available options. Having the right network of real estate and lending professionals in your corner can help you plan for the homebuying process as well as determine what you can afford and how you can get pre-approved when you’re ready.

Most importantly, we can help you understand how homeownership is achievable. As Lauren Bringle, Accredited Financial Advisor with Self Financial, says:

“Don’t write home ownership off just because you have a low income . . . . With the right tools, resources and assistance, you could still achieve your dream.”

Bottom Line

If you’re planning to be a homeowner one day, the best thing you can do is start preparing now. Even if you don’t think you’ll purchase for a few years, let’s connect today to discuss the process and to set you up for success on your journey to homeownership.

Looking to Buy, Sell, or Invest? Contact:

Wednesday, August 18, 2021

Surprising Shift Favors Homeowners: Buyers Now Prefer Existing Homes

In April, the National Association of Home Builders (NAHB) posted an article, Home Buyers’ Preferences Shift Towards New Construction, which reported:

“60% of people who were looking to buy a home in 2020 said they’d prefer new construction to an existing home.”
However, it seems buyers are now shifting their preferences back to existing homes.

The latest Consumer Confidence Survey reveals the percentage of Americans planning to buy a home in the next six months is virtually the same as it was back in March. However, the percentage that plan to buy a newly constructed home is lower for that same period.

NAHB confirms this sentiment in their latest Housing Trends Report. The organization explains that existing homes are now the top preference among today’s buyers. Here’s a

breakdown of those findings:

Why the shift?

There are several reasons why buyer preference is shifting. Here are two that impact purchasers looking to move in now:

The process may move faster. Builders may not be able to guarantee when the house will be complete and ready for move-in due to supply chain challenges with materials like lumber and appliances. If you buy an existing home, not only is it ready, it also likely has a refrigerator, range, and other necessary home appliances already.
There are no unexpected costs during the buying process. With the price of land, labor, and lumber being so volatile, many builders are including an escalation clause in the price negotiation to cover rising expenses. With an existing home, the final price you will pay is negotiated upfront.

Bottom Line

If you’re a homeowner looking to sell, your house is more attractive to a greater number of buyers as compared to earlier in the year. This might be the time for us to connect to discuss the possibility

Looking to Buy, Sell, or Invest? Contact:

Wednesday, June 2, 2021

6 Reasons to Celebrate National Homeownership Month

Our homes are so much more than the houses we live in. For many, they’ve also become our workplaces, schools for our children, and safe harbors in which we’ve weathered the toughest moments of a global pandemic. Today, 65.6% of Americans call their homes their own, a rate that has risen to its highest point in 8 years.

As National Homeownership Month kicks off this June, homeowners have every reason to celebrate. A survey by Gallup just ranked real estate as the best investment you can make for the eighth year in a row. However, unlike other investment options, the benefits of owning a home aren’t purely financial. Here are the top ways Americans are winning by owning a home.

Non-Financial Benefits:

1. Civic Participation: Owning a home is owning a part of your neighborhood. Homeowners have a stronger connection to their neighborhoods and are more committed to volunteer work and other ways to get involved.

2. Pride of Ownership: Owning a home is having a space that is uniquely yours. You can customize it to your personal liking and make it reflect your personality and values.

3. A Safe Space: Owning a home gives you a sense of security and privacy – two things that have become even more valuable as we’ve tackled the challenges of the recent health crisis.

Financial Benefits:

1. Forced Savings: Owning a home builds equity. Your equity grows with each payment you make toward your mortgage. This form of forced savings can be used down the road to help you accomplish your biggest financial goals.

2. Appreciation: Owning a home is making an investment that steadily gains value, and experts project home values will continue to rise in the years to come.

3. Stability: Owning a home means having better control over your future housing payments. Over the years, a mortgage stays relatively steady, but rent costs continue to rise.

Bottom Line

If you own your home, take time this June to celebrate the ways homeownership has added value to your life. If you hope to become a homeowner this year, let’s connect today to take the first steps toward achieving your goal.

Looking to Buy, Sell, or Invest? Contact:

Saturday, May 15, 2021

Americans Find the Nonfinancial Benefits of Homeownership Most Valuable

Homeownership is a foundational part of the American Dream. As we look back on more than a year of sheltering in our homes, having a place of our own is more important than ever. While financial benefits are always a key aspect of homeownership, today, homeowners rank the nonfinancial and personal benefits with even higher value.

Recently, two national surveys revealed the reasons homeownership is such an important part of life. The top three personal benefits of homeownership noted by respondents in Unison’s 2021 report on The State of the American Homeowner are:

91% – feel secure, stable, or successful owning a home
70% – feel emotionally attached to the homes that have kept them safe over the past year
51% – call homeownership a “key part of their life”

These sentiments were supported by the most recent National Housing Survey from Fannie Mae, which also shows that the top three reasons Americans value homeownership have nothing to do with money. Those surveyed were given a list of feelings and accomplishments that are associated with or impacted by where we live. They were then asked, “To achieve this, are you better off owning or better off renting?”

Here are the top three points from the list that respondents said homeownership could help them achieve:

91% – control over what you do with your living space
90% – a sense of privacy and security
89% – a good place for your family to raise your children

Other nonfinancial advantages of homeownership revealed by the survey include feeling engaged in a community, having flexibility in future decisions, and experiencing less stress.

Bottom Line

Financial and nonfinancial benefits are a key component to the value of homeownership, but the nonfinancial side is most valued after a year full of pandemic-driven challenges. Let’s connect today if you’re ready to take the first steps toward becoming a homeowner.

Looking to Buy, Sell, or Invest? Contact:

Thursday, April 15, 2021

Homeownership Is Full of Financial Benefits

A Fannie Mae survey recently revealed some of the most highly-rated benefits of homeownership, which continue to be key drivers in today’s power-packed housing market. Here are the top four financial benefits of owning a home according to consumer respondents:

88% – a better chance of saving for retirement
87% – the best investment plan
85% – the chance to be better off financially
85% – the chance to build up wealth

Additional financial advantages of homeownership included in the survey are having the best overall tax situation and being able to live within your budget.
Does homeownership actually give you a better chance to build wealth?

No one can question a person’s unique feelings about the importance of homeownership. However, it’s fair to ask if the numbers justify homeownership as a financial asset.

Last fall, the Federal Reserve released the Survey of Consumer Finances, a report done every three years, with the latest edition covering through 2019. Their findings confirmed that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters ($255,000 for homeowners compared to $6,300 for renters).

The difference in net worth between homeowners and renters has continued to grow. Here’s a graph showing the results of the last four Fed surveys:

The above graph only includes data through 2019, but according to CoreLogic, the equity held by homeowners grew by $26,300 over the last twelve months alone. That means the gap between the net worth of homeowners and renters has probably widened even further over the last year.

Some might argue the difference in net worth may be due to homeowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows homeowners have greater net worth than renters regardless of their income level. Here are the findings

Others may think homeowners are older and that’s why they have a greater net worth. However, a Joint Center for Housing Studies of Harvard University report on homeowners and renters over the age of 65 reveals:

“The ability to build equity puts homeowners far ahead of renters in terms of household wealth…the median owner age 65 and over had home equity of $143,500 and net wealth of $319,200. By comparison, the net wealth of the same-age renter was just $6,700.”

Homeowners 65 and older have 47.6 times greater net worth than renters.

Bottom Line

The idea of homeownership as a direct way to build your net worth has met the test of time. Let’s connect if you’re ready to take steps toward becoming a homeowner.

Looking to Buy, Sell, or Invest? Contact: