If you need assistance, please call 513-368-3751

Why Owning A Home Makes Sense Financially

Monday, February 1, 2016   /   by Eric Lowry

Why Owning A Home Makes Sense Financially

Harvard: Why Owning A Home Makes Sense Financially | Simplifying The Market

Harvard: Why Owning A Home Makes Sense Financially

 

We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own differ for each buyer, with many basic similarities.

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.”

Bottom Line

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 or text The Lowry Team at 513-368-3751

Blank_search_bar.png

Courtesy of the MLS of Greater Cincinnati. Copyright © 2020 Multiple Listing Services of Greater Cincinnati / All Information is believed accurate, but NOT guaranteed. The data relating to real estate for sale on this Web site comes in part from the Broker Reciprocity programs of the MLS of Greater Cincinnati, Inc. Those listings held by brokerage firms other than are marked with the Broker Reciprocity logo and house icon. The properties displayed may not be all of the properties available through Broker Reciprocity. Data on this site was last updated: September 25, 2020
Properties marked with the DABR logo are provided courtesy of the Dayton Area Board of REALTORS® MLS IDX Database. Information provided is for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.. Information Deemed Reliable But Not Guaranteed.
Information is provided exclusively for consumers’ personal use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS.
This site powered by CINC: www.cincpro.com