The famous quote attributed to Mark Twain can apply to homeownership in the United States today. During the housing bubble of the last decade, the homeownership rate soared to over sixty-nine percent. After the crash, that percentage continued to fall for the next ten years.
That led to speculation that homeownership was no longer seen as a major component of the American Dream. That belief became so widespread that the term “renters’ society” began to be used by some to define American consumers.
However, the latest report by the Census Bureau on homeownership shows that over the last two years, the percentage of homeowners has increased in each of the last eight quarters.
It appears the homeownership rate will continue to increase.
The 2019 Aspiring Home Buyers Profile recently released by the National Association of Realtors revealed that 84% of non-owners want to own a home in the future. That percentage increased from 73% earlier last year.
In the United States, the concept of homeownership as part of the American Dream is very much alive and well
Every family has a list of important dates. We celebrate birthdays, anniversaries, pet adoptions…and the list goes on. For 64.4 percent of households in the United States, this list includes the day they became a homeowner for the first time!
Why is this date important? Homeownership is not just a roof over your head! It represents shelter, stability, wealth, and pride! For decades, homeownership has been an important part of the American Dream!
However, many people question if the next generations see the same benefits of homeownership as their predecessors.
In case we have forgotten, some of those benefits are:
1) Educational Achievement: Homeownership has a positive impact on academic achievement, including reading and math performance in children 3-12 years old.
2) Civic Participation: “Owning a home means owning a part of the neighborhood.” Homeowners have a stronger connection to their neighborhood and are more committed to volunteer.
3) Health Benefits: Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a substantial health advantage over renters.
4) Public Assistance: The report shows 47% of homeowners use their home equity credit lines to help pay other debts, diminishing their need for public assistance.
5) Property Maintenance and Improvement: A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.
6) Pride of Ownership: This place is unique as it is “yours.” You can customize it according to your likes and personality.
In addition to financial benefits, homeownership also brings significant social benefits. These not only pertain to the family, but extend to the communities, the state, and the country!
Buying a home is an investment in your future!
- Appreciation: On average, home prices are appreciating annually at a rate of 3.6%. This helps to create a safety net.
- Forced Savings: Your mortgage is like a forced savings plan! With each payment, you are reducing the principal of your loan.
- Home Equity: Homeownership builds equity every single month. You can later use that equity to start a business, send your children to college, etc.
- Net Worth: A homeowners’ net worth is 44x greater than renters! This gives you the financial freedom to invest.
- Stability: Rent prices increase 4% annually! A fixed mortgage payment allows you to save for future projects and guard against inflation.
- Tax Benefits: The government has created tax benefits to encourage customers to purchase. (Talk to your CPA to see which benefits apply to you).
Homeownership is and will always be part of the American Dream! There are many financial and non-financial benefits to take advantage of when owning a home. If owning a home is part of your dream, contact a local real estate professional to help you with the process!
- The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
- Freddie Mac predicts interest rates to rise to 5.1% by the end of 2019.
- CoreLogic predicts home prices to appreciate by 4.8% over the next 12 months.
- If you are ready and willing to buy your dream home, find out if you are able to!
If you’ve ever watched “The Price is Right,” you know that the only way to win is to be the one to correctly guess the price of the item you want without going over! That means your guess must be just slightly under the retail price.
In today’s shifting real estate market, where more inventory is coming to market and home values are projected to appreciate at lower rates, homeowners will not be able to price their homes as aggressively as they were able to just last year.
They will have to employ the same strategy: be the closest without going over!
As we have explained before, pricing your home at or slightly below market value actually increases the number of buyers who will see your home in their search!
Over the last six months, more inventory has come to market while the months’ supply of inventory available has dropped. This means that the demand for homes to buy is still very strong throughout the country!
Homeowners who make the mistake of overpricing their homes will eventually have to drop the price. This leaves buyers wondering if the price drop was caused by something wrong with the homes when in reality nothing was wrong, the price was just too high!
If you are thinking about listing your home for sale this year, let’s get together to properly price your home from the start!
Interest rates for a 30-year fixed rate mortgage climbed consistently throughout 2018 until the middle of November. After that point, rates returned to levels that we saw in August to close out the year at 4.55%, according to Freddie Mac’s Primary Mortgage Market Survey.
After the first week of 2019, rates have continued their downward trend. As Freddie Mac’s Chief Economist Sam Khater notes, this is great news for homebuyers. He states,
“Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent. Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy.”
In some areas of the country, the combination of rising interest rates and rising home prices had made some first-time buyers push pause on their home searches. But with more inventory coming to market, continued price growth, and interest rates slowing, this is a great time to get back in the market!
Will This Trend Continue?
According to the latest forecasts from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors, mortgage rates will increase over the course of 2019, but not at the same pace they did in 2018. You can see the forecasts broken down by quarter below.
Even a small increase (or decrease) in interest rates can impact your monthly housing cost. If buying a home in 2019 is on your short list of goals to achieve, let’s get together to find out if you are able to today.
- If you are planning on listing your house for sale this year, here are the top four home improvement projects that will net you the most Return on Investment (ROI).
- Minor bathroom renovations can go a long way toward improving the quality of your everyday life and/or impressing potential buyers.
- Upgrading your landscaping or curb appeal helps get buyers in the door. These upgrades rank as the 2nd and 4th best renovations for returns on investment.
- Interest rates are projected to increase steadily throughout 2019, but buyers will still be able to lock in a rate lower than their parents or grandparents did when they bought their homes!
- Home prices will rise at a rate of 4.8% over the course of 2019 according to CoreLogic.
- All four major reporting agencies believe that home sales will outpace 2018!
DID YOU KNOW? Bigger state and local tax collections, propelled in part by an acceleration in sales-tax receipts from consumer spending, is boosting capital projects and driving a municipal borrowing boom. Spending on transportation infrastructure in October was up 15% from a year earlier. State tax revenues grew 6.3% in the second quarter of 2018 compared with an average second-quarter growth rate of 2.5% for the previous eight years Local infrastructure spending may accelerate. (WSJ)
DID YOU KNOW? Apple is also expanding its presence in San Diego as part of its plan to expand its operations across the country. While its $1 billion campus in Austin, Texas made headlines this week, it will also "establish new sites" in San Diego, Seattle, and Culver City, California. The San Diego, Seattle and Culver City sites would each have more than 1,000 workers, Apple announced. Apple will add 20,000 jobs in the U.S. by 2023. (10news)
DID YOU KNOW? Approximately 80% of all population growth since 2000 in Texas has been in the four large metropolitan areas: Dallas-Fort Worth, San Antonio, Austin and Houston. Between 2000 and 2016, according to the Bureau of Labor Statistics, or BLS, Austin expanded its employment by over 50%, while Houston, Dallas and San Antonio grew above 30%, more than twice the growth of New York and three time that of San Francisco and Los Angeles. Texas added 3 million people between 2010 and 2016 - including 940,000 migrants from other states. In comparison, California lost more than 500,000 domestic migrants to other states and New York lost nearly one million. Since 2000, New York, Chicago, Los Angeles and Boston grew by under 10%. (Daily Beast)
“We don’t have any of the early signs of recession. Yet, we have a market where despite 20% earnings growth, the price-earnings ratios have fallen 20%. This tells us the market is pricing in recession in 2019. We just don’t think that is going to happen.” - Steve Chiavarone, Federated
DID YOU KNOW? New York, Connecticut, Louisiana, California, Florida, and Massachusetts ranked worst in income inequality. The fastest growing income inequality is in Montana, California, Maine, Rhode Island and Idaho. (CNBC)
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