Harvard’s 5 Financial Reasons to Buy a Home

Eric Belsky, Managing Director of the Joint Center of Housing Studies at Harvard University, also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. Last year, he released a paper on homeownership - The Dream Lives On: the Future of Homeownership in America. In his paper, Belsky reveals five financial reasons 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, 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.”

Bottom Line
We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. 

From Keeping Current Matters

5 Extra Benefits to Home Ownership

Owning a home is a big part of the American Dream. Did you know that apart from pride of ownership and a number of tax benefits, there are some more benefits of home ownership? Read on...

1. Higher Academic Achievement:

1.Home owners are more involved in their children’s lives and that makes for better grades.

2.Home owners don’t move around like renters, so children have a more stable environment.

2. More Cohesive Communities:

1.Home owners take care of their homes.

2.That nosy neighbor is really your big ally.

3. Stronger Families:

1. Home ownership builds stronger families - they volunteer at schools, coach athletic teams       or become scout/troop leaders

2. Less likely to have alcohol or substance-abuse problems

4. Improved Health & Safety:

1.Home owners enjoyed better physical and emotional health.

2.Since they have a financial stake in their homes, they are motivated to deter crime in their neighborhoods.

5. Stronger Economy: Each home purchase generates as much as $60,000 of economic activity in the surrounding area.

From National Association of Realtors

 

Are you a buyer looking for a home?

Check out all homes for sale in Columbia and Lexington at www.homesincolumbiasc.net

 

Or call me on 803-348-9922.

 

For... all Real Estate matters!

 

5 Benefits to Home Ownership

An Englishman’s home is his castle, they say, but so is an American’s. We love our homes… to decorate, to create a warm loving environment for the family and to show off… er… entertain friends. And whether our thumbs are green or brown, whether our allergies are seasonal or year-long, we love to putter in the yard and struggle to grow organic tomatoes, a gigantic pumpkin, the perfect weed-free lawn. Yup! That’s pride of ownership?

Then there tax advantages – nothing to sneeze about. And finally, there is that pot of gold at the end of the rainbow – appreciation of real estate so that when we are ready to sell, we can make a hefty profit.

Wait... there's more. Put on your 3D glasses and look at the larger picture, the 70 mm 3D version. There are more substantial benefits for families, communities and in fact, the whole country.

1.      Higher Academic Achievement: It has been proven, say experts, that home owners are more involved in their children’s lives and that makes for better grades. Plus, home owners don’t move around like renters, so children have a more stable environment.

2.      More Cohesive Communities: Home owners take care of their homes and a wholesome interest in their neighborhoods. That nosy neighbor is really your big ally. Here are some stats:
- 28% are more likely to repair or improve their homes

            -        28% are more likely to vote
             -        11% are more likely to know who their Congressman is
             -        9% are more likely to know who is on their school board

3.      Better Connected Families: Home ownership builds stronger families.
- They volunteer at schools, coach athletic teams or become scout/troop leaders

            -        16% are more likely to attend PTA meetings, book clubs, etc.
            -        10% are more likely to attend church or other religious institutions
            -        Less likely to have alcohol or substance-abuse problems

4.      Improved Health & Safety:

           -        Home owners enjoyed better physical and emotional health.
           -        Since they have a financial stake in their homes, they are motivated to deter crime in    
their neighborhoods by forming community watch groups, leading to safe and stable communities.
          -        Children of home owners are 20% less likely to become teenage mothers.

5.      Stronger Economy: Experts opine that each home purchase generates as much as $60,000 of economic activity in the surrounding area – think of remodeling, landscaping, furniture and home appliances… it’s a long list.

Convinced? Now… call me (M 803-348-9922) to help you buy a home!

Source: NAR’s Field Guide to the Benefits of Home Ownership

Check out all homes for sale in Columbia and Lexington at www.homesincolumbiasc.net.

For... all Real Estate matters!

Homeowners at 25!

This year, several of my clients have been young people in their mid-twenties. These smart kids know the value of home ownership, or rather, their parents have instilled in them the value and pride of home ownership.

 

And they have all been young women.

 

Kay, a nurse’s assistant, was 24 when she started looking for a home. She was straight out of college, single and at her 1^st job, but decided that she did not need Mr Right to buy her a house. She knew exactly what she wanted and had saved enough for a down payment.

 

Like most young people of her generation, she was computer savvy, had looked at a lot of homes online before going out to see homes. She had great credit, had talked to a loan officer and got pre-approved and was all set to go. What a dream client!

 

We had a contract on a home before her 25^th birthday and she moved into a brand new home a month after her birthday!

 

Jay, another young lady, was 26 when she bought her new home. Like Kay, she had done her homework on areas that were suitable for her and had saved for a down payment.

 

Both these ladies are from small towns, and Columbia is the action-packed metropolis. As Jay said: ‘They had just 1 traffic light in her town, and Wal-Mart was 10 miles away.’

 

Their protective parents and siblings made several anxious trips to make sure that their head-strong daughters chose the right home in a safe neighborhood.

 

I have just helped yet another young lady buy a home – same scenario - very smart, has great credit and has put money by for the down-payment. And… she picked out her dream home in 2 days!

 

These were the more fortunate ladies with no school loans and no babies from teenage pregnancies.

 

Dee came to me 2 years ago. Sadly, her credit was bad and she needed to get that fixed first. With 2 babies and a boyfriend not worth mentioning, I know how difficult it was. But… she has fixed her credit and attended homeownership classes to qualify for a down-payment assistance program. $4,000 that could be forgivable is not a bad deal, right? She now has a contract on a home and hopes to close soon.

 

This leaves me wondering… why aren’t young men saving up and buying homes?