Home Ownership in America
It has been an established financial principle that home ownership is a key to wealth building. While the economy is in recovery and the housing industry is poised for a comeback, it is a good time to reevaluate whether home ownership is the right choice for those who have been on the fence.
The Joint Study for the Nation’s Housing of Harvard University is an institution that studies and reports on housing’s critical role in the American economy and in communities. Here are some key points from the most recent study of housing in 2014.
A Home of One’s Own
Owning a “place of one’s own” has long been integral to the American Dream. Among every demographic today, home ownership is a desirable path for the majority of people. When most of us investigate the potential of buying a home, we have intrinsic, esoteric reasons, and we have analytically calculated reasons. We use both sides of our brains to make housing decisions.
What Americans Think About Buying A Home
The Case-Shiller Report of Home Affordability shows that in 2015 it is cheaper to buy than to rent in 94 of the 100 metropolitan areas in the country. Add to that the fact that rents have increased over the last few years, and are projected to increase another 3.3% throughout 2015. Rents are increasing more than home values.
Historically low interest rates combined with reasonable home values has maintained the affordability of real estate. While home values have increased by 3.7% nationally over last year, these values will only continue to increase. Buying a home will be a better option for those who are capable.
Home appreciation is happening in most areas of the country, at a pace that is normal and healthy, and also at a pace that is higher than wage growth in 76% of the U.S. As economic conditions improve, more Americans have job stability and savings to seriously consider home ownership.
What Americans Feel About Home Ownership
The Harvard housing study reveals the top five reasons why home ownership is a value to Americans.
- Home is a place to raise children and provide a good education.
- Home is a place of safety.
- Owning a home provides more space for your family.
- Owning a home provides control over your own living space.
- Home ownership is a good way to build wealth to pass on to your family.
Wealth-building is a value that crosses from right-brain to left-brain very easily. Having wealth to pass on to family makes sense to both the rational mind and the heart. The number one way to build wealth for most Americans is home ownership.
Case Study: My Parents
When my dad retired from the Navy, my parents bought a 2.5 acre parcel in a small town in Florida. They built a house, then subdivided the lot, then built another house. They sold the first house. Then they sold the 2nd house, bought a fixer-upper (for cash) and moved into it, and fixed it up. Two years later, they sold that house for double what they paid for it. (it was 2006, the top of the market…what excellent timing!) They bought a home that my mother now lives in, and all along the way invested extra money in stocks. (the stocks haven’t done very well…the real estate did.)
All of this took place over 45 years, of course, but that’s what real estate is…a long-term wealth-building asset. It’s not an ATM, to be refinanced at every opportunity.
If you’re ready to make the step to home ownership, give us a call, we can help you through the process.
Chris Highland, 301-401-5119. Or Contact Us Here.