Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership in his paper –The Dream Lives On: the Future of Homeownership in America.
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.”
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 one of the many considering a purchase this year, let’s get together to discuss your options!
Call/text Jim at 605-858-0775 or click on the contact us button above for a free, no cost, no obligation home buyer consultation.
We appreciate you stopping by, so please accept this free gift, “Things to Consider Buying A Home”, as a token of our gratitude.
The “Home Buyer Guide” will be sent to the email entered above, please check for spelling errors.
Are You Thinking About Buying a Home?
The process of buying a home can be overwhelming at times, but you don’t need to go through it alone.
You may be wondering if now is a good time to buy a home…or if interest rates are projected to rise or fall. The free Home Buyer eGuide will answer many of your questions and likely bring up a few things you didn’t even know you should consider when buying a home.
Check it out, just fill in your information above for instant access.