Unless you've been living with no technology (in which case you wouldn't even read this), then you know that the housing market is booming. Recent reports show that the US homeownership rate has rebounded from recent lows and is headed in the right direction. This is likely due to the rising costs of renting and the increasing options as listing inventory - although still very low - is increasing. With 2018 fast approaching, I thought it would be good to share, 5 Reasons Owning A Home Should Be On Your 2018 Resolution List.
Homeownership is a form of forced savings
Paying your mortgage each month allows you to build equity in your home that you can tap into later in life for renovations, to pay off high-interest credit card debt, or even send a child to college. As a renter, you guarantee that your landlord is the person with that equity. The contrarian in me wants to talk about how you might end up paying for the home 2 or 3 times over, but ultimately, for the average American, home equity might be the only substantial savings they have in the early years.
Homeownership provides tax savings
One way to save on taxes is to own your own home. Note that this should NEVER, EVER be the reason you buy. You may be able to deduct your mortgage interest, property taxes, and profits from selling your home, but make sure to always check with your accountant first to find out which tax advantages apply to you in your area. In addition, real estate as a tax shelter is an amazing option for the future. That's not the subject of this post, but there's definitely strategies that can leverage real estate to save you massive tax dollars and if done right can help you manage the cost of retirement communities.
Homeownership allows you to lock in your monthly housing cost
This is pretty huge. Just a few years ago, when you were looking for an average sized home to rent you could get a bunch of options in the $800 a month range in the Atlanta real estate market. Now those same homes are as much as $1,500 a month to rent. When you purchase your home with a fixed-rate mortgage, you lock in your monthly housing cost for the next 5, 15, or 30 years. Interest rates have remained around 4% all year, marking some of the lowest rates in history. The value of your home will continue to rise with inflation, but your monthly costs will not.
Buying a home is cheaper than renting
According to the latest report from Trulia, it is now 37.4% less expensive to buy a home of your own than to rent in the US. That number varies throughout the country but ranges from 6% cheaper in San Jose, CA to 57% cheaper for real estate in Detroit, MI. This is true of many areas now. The main reason being the lack of listing inventory and overall lack of multi-unit or high density housing development.
No other investment lets you live inside of it
You can choose to invest your money in gold or the stock market, but you will still need somewhere to live. In a home that you own, you can wake up every morning knowing that your investment is gaining value while providing you a safe place to live. Ultimately, it puts you in control.
Bottom Line
Before you sign another lease, perhaps you should sit with an honest real estate agent in your area to better understand all your options.
