I have reported many times that the American
Dream of home ownership 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 home ownership titled - The
Dream Lives On: The Future of Home Ownership 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, home ownership 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
I realize that
home ownership 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, let’s get together and evaluate your ability to do so.
You can always reach me @ 313 999-8900
If you like my blog posts, it would mean the world to me if you
shared it with your friends.
Patrice M Miller
Realtor/Associate Broker
ReMax Innovation
313 999-8900 Cell
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