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Home Ownership Matters

by House Logic- Realtors

 

 

 

 

 

 

 

 

 

Home ownership has a significant impact on net worth, educational achievement, civic participation, health, and overall quality of life. And, home ownership helps create jobs—lots of them—right here at home.

Owning your own home is not only beneficial to you; it also helps create jobs and stimulate the economy.
 

Home Ownership matters…to people, to communities, and to America. Why?

For every two homes sold, one job is created in the U.S.

Each purchase generates as much as $60,000 in economic activity over time.

The home ownership debate

Some who care about creating jobs also argue that home ownership may be overrated, and that we might be better off as a nation of renters.

If that’s of concern to you, follow the debate about federal government incentives to home ownership—the outcome of which will determine whether the average American can still get an affordable mortgage and whether home owners can continue to deduct their mortgage interest as a benefit of home ownership. 

Stay in the know on this debate by subscribing to the HouseLogic newsletter and following us on Facebook and Twitter. Sign up in the “Stay Connected” box at the top of this page.

Read about the issues affecting you as a home owner right now:

Home ownership

It Pays to Support Responsible Home Ownership
Protect your home’s value and build stronger communities.

Home Ownership Matters Bus Tour Hits the Road
The Home Ownership Matters bus tour, sponsored by the NATIONAL ASSOCIATION OF REALTORS®, is revving up to celebrate the benefits of home ownership with you.

Home Ownership Matters Ad

Mortgages

How Fannie Mae, Freddie Mac Save You Money
Home owners who use Fannie Mae and Freddie Mac mortgages save thousands of dollars in interest payments each year.

Show Your Support for FHA
FHA supports home values by providing a steady source of mortgage financing for families across the country, but critics worry it has taken on too much risk.

Mortgage deduction

Your Mortgage Deduction: Turn Tax Savings into Home Value
Sock away your mortgage deduction tax savings, and you’ll have a nice cushion for life’s necessities—and a few luxuries. Here’s how a typical household might spend their tax savings at various life stages.

6 Mortgage Interest Deduction Myths
Think losing the mortgage interest deduction would be no big deal? We bust seven myths to show why the cost is bigger than you think.

Deduct Mortgage Interest and Home Equity Loans
Deducting mortgage interest, as well as interest on home equity loans and HELOCs, can save you money on taxes.

MID app
Estimate your tax savings based on the mortgage interest deduction.

Home Sales Expected to Soar Through 2018: What Buyers Need to Know

by Clare Trapasso

By now just about every would-be buyer out there knows there simply aren't enough homes for sale these days to appease the hordes of competition. But despite the shortages, rising prices, and bidding wars, more homes are expected to be sold this year than in more than a decade.

In 2017, the number of sales of existing homes (which have previously been lived in) is expected to rise about 3.5%, to 5.64 million, according to the midyear forecast from the National Association of Realtors®. The group predicts that existing-home purchases will rise an additional 2.8% in 2018, to 5.8 million.

"The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation, and rising consumer confidence are giving more households the assurance and ability to purchase a home," NAR Chief Economist Lawrence Yun said in a statement. "However, prices are still rising too fast in many areas and are outpacing incomes."

Related Articles

What Slowing New Home Construction Means for the Housing Market
Existing-Home Sales Hit Highest Numbers Since Recession
Think Home Prices Are High Now? Why They're Likely to Keep Going Up

Sales of brand-new homes, which builders can't seem to put up fast enough, are expected to jump 10.7%, from 560,000 in 2016 to 620,000 this year, according to NAR. They're expected to rise an additional 8% in 2018, to 670,000 sales.

Find homes for sale on

New homes are typically more expensive than existing homes, as builders must contend with shortages of land and labor, plus rising costs of materials and difficulty obtaining financing.

The price tags of all homes are expected to keep rising. NAR predicts prices will jump 5% in 2017 and an additional 3.5% in 2018.

"As a result, buyers are compromising on the number of rooms, length of a commute, or other home qualities," says Senior Economist Joseph Kirchner of realtor.com®. "Meanwhile, builders are mostly building for the mid- to upper-price range. This mismatch in supply and demand is making affordability more acute for those with modest incomes."

In some white-hot markets along the coasts, prices are rising by double digits because of the dearth of homes. That's led many current homeowners who might be interested in trading up to a larger, nicer home in their area to hold off—because those homes are simply out of their price range.

Bidding wars have gotten so bad in Seattle that buyers are driving up prices 30% over asking in some cases, says local real estate broker Chris Bajuk, of HomeSmart Real Estate Associates. (Seattle prices were up 12.2% year over year in February, according to the latest S&P CoreLogic Case-Schiller report.)

"It is crazy," Bajuk says. "There's strong demand and lack of supply."

Buyers are coping by putting ever-higher percentages of their incomes toward homeownership—even when it means eating at home every night and doing without new clothes or annual beach vacations. Sometimes they're spending half of their take-home pay on housing, he says.

Others are purchasing homes farther from the city center where they work, settling for smaller homes or even purchasing residences in need of some work.

“They may need to spend more of their disposable income," Bajuk says. "Or they may need to lower their expectations on what kind of home they get."

Clare Trapasso is the senior news editor of realtor.com and an adjunct journalism professor. She previously wrote for a Financial Times publication and the New York Daily News. Contact her at [email protected]
Follow @claretrap

Old Millennials' Are Diving Head-First into Homeownership

by KCM Blog

'Old Millennials' Are Diving Head-First into Homeownership

'Old Millennials' Are Diving Head-First into Homeownership [INFOGRAPHIC] | MyKCM

Some Highlights:

  • 'Old Millennials' are defined as 25-36 year olds according to the US Census Bureau.
  • According to NAR's latest Profile of Home Buyers & Sellers, the median age of all first-time home buyers is 31 years old.
  • More and more 'Old Millennials' are realizing that homeownership is within their reach now!

Building Wealth: First Rung on the Ladder is Housing

by KCM Blog

Building Wealth: First Rung on the Ladder is Housing

Posted: 07 Apr 2016 04:00 AM PDT

Building Wealth: First Rung on the Ladder is Housing | Keeping Current Matters

How Housing Matters is a joint project of the Urban Land Institute and the MacArthur Foundation. It is “an online resource for the most rigorous research and practical information on how a quality, stable, affordable home in a vibrant community contributes to individual and community success”. A recent story they published, The First Rung on the Ladder to Economic Opportunity Is Housing, discussed the importance of having affordable housing available to as many families as possible because:

“The ladder to economic success can stretch only so high without the asset-building power of homeownership. Home equity provides Americans with the ability to send their children to college with less student loan debt and is the primary source of funds for retirement. Half of the assets of Americans over age 55 are in their home.”

Bottom Line

We have often posted that the net worth of a family owning a home is 45 times greater than that of a family that rents. That is not a coincidence.


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Don't Be Fooled... Homeownership Is A Great Investment!

by KCM Blog
   

Don't Be Fooled... Homeownership Is A Great Investment!

Posted: 01 Apr 2016 04:00 AM PDT

Don't Be Fooled... Homeownership Is A Great Investment! [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Harvard University's Joint Center of Housing Studies recently released the top financial & emotional reasons to own a home.
  • Owning is a good way to build up wealth that can be passed along to your family as it is usually a form of "forced savings."
  • You're paying for a house whether you own or rent, but owning gives you control over your living space.

 

 

 

One More Time, Real Estate is a Great Investment

by KCM Blog

One More Time, Real Estate is a Great Investment

Posted: 02 Mar 2016 04:00 AM PST

One More Time, Real Estate is a Great Investment | Keeping Current Matters

In a recent blog post on Marginal Revolution, economist Alex Tabarrok discussed homeownership as an investment.

Here is what Mr. Tabarrok had to say:

“Housing is overrated as a financial investment. First, it’s not good to have a significant share of your wealth locked into a single asset. Diversification is better and it’s easier to diversify with stocks. Second, unless you are renting the basement, houses don’t pay dividends. Stocks do. You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market. You didn’t expect to get a great investment and a place to live in the meantime, did you?”

Here is a rebuttal:

We have reported many times that the American Dream of homeownership is alive and well. Tomorrow, we’ll touch on the personal benefits to homeownership. Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top financial benefits of homeownership in his paper -The Dream Lives On: the Future of Homeownership in America. Let’s use some quotes from Belsky’s study to address comments by Mr. Tabarrok:

Tabarrok:  

“Housing is overrated as a financial investment.”

Belsky:

“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.”

Tabarrok:

You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market.”

Belsky:

“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.”

Tabarrok:

“You didn’t expect to get a great investment and a place to live in the meantime, did you?”

Belsky:

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord. 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.”

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 considering a purchase this year, contact a local professional who can help evaluate your ability to do so.

Obstacles to Homeownership: Perceived or Real?

by KCM Blog

Obstacles to Homeownership: Perceived or Real?

Posted: 07 Jan 2016 04:00 AM PST

Obstacles to Homeownership: Perceived or Real? | Keeping Current Matters

Yesterday, we discussed the belief Americans have in homeownership and their desire to partake in this piece of the American Dream. We also discussed some of the obstacles preventing them from attaining that goal. However, studies have shown that that many of the obstacles mentioned are perceived, not real. A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges.

Down Payment

Perceptions

Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 40% of all renters don’t know what down payment is required
  • 15% think you need at least 20% down
  • An additional 4% think you need at least 10% down

The Reality

There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%.

Credit Score

Perceptions

Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 54% of all renters don’t know what credit score is required
  • 5% think you need at least a 740 credit score

The Reality

Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.

Back End Debt-to-Income Ratio (DTI)

Perceptions

Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 59% of all renters don’t know what DTI is acceptable
  • 25% think you need at under 25%
  • 7% think you need under 39%

The Reality

Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.

Bottom Line

Don't let a lack of knowledge or misinformation keep your family from buying a home this year. Meet with a local real estate professional who can evaluate if your ability to buy now!

Billionaire Says Real Estate is Best Investment Possible

by Allison Simson

Billionaire money manager John Paulson was interviewed at the Delivering Alpha Conference presented by CNBC and Institutional Investor. During his session he boldly stated:

"I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you're the owner-occupier of.”

Who is John Paulson?

Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?

According to Forbes, John Paulson is:

“A multibillionaire hedge fund operator and the investment genius.”

According to the Wall Street Journal, Paulson is:

“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.”

Why does he believe homeownership is such a great investment?

Paulson breaks down the math of homeownership as an investment:

"Today financing costs are extraordinarily low.”

The latest numbers from Freddie Mac show us that you can still get a 30-year mortgage for under 4%.

“And if you put down, let's say, 10 percent and the house is up 5 percent,” as many experts predict, “then you would be up 50 percent on your investment."

How many are seeing a 50% return on a cash investment right now?

Paulson goes on to compare the long term financial benefits of owning verses renting:

“And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”

Bottom Line

Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.

Chicken Little is Wrong: Homeownership Still the American Dream

by Allison Simson

After the harrowing challenges experienced by so many homeowners over the last few years, many housing experts had predicted that the belief in homeownership as a major element of the American Dream would soon die. There is now conclusive evidence that these experts were wrong. As we reported back in September, The Joint Center of Housing Studies at Harvard University completed a study which concluded:

The long term cultural preference for owning seems to have weathered the recent housing crisis.”

Now, a second source recently announced similar results. Fannie Mae just released their National Housing Survey of Delinquent Mortgage Borrowers. The survey asked questions about the value of homeownership to the most sensitive of all groups – those delinquent on their mortgages. Here is what they found:

Of those delinquent borrowers:

  • 74% still see homeownership as better than renting when building up wealth
  • 71% still see homeownership as better than renting when saving for retirement
  • 73% still see homeownership as better than renting for overall financial stability
  • 80% still see homeownership as better than renting as an investment plan
  • 70% still see homeownership as better than renting for creating an overall tax strategy

Bottom Line

Homeownership has always been and will always be a crucial piece of the American Dream.

Taken from Keeping Current Matters Blog

4 Real Estate Trends to Look For in 2013

by Allison Simson

Predicting trends during volatile economic times in American is no easy task. However, I have pulled the crystal ball out of the attic and have found some information that may have some ideas for 2013! We strongly believe these are the four real estate items we should keep an eye on in 2013:

Demand for Housing Will Continue to Surge

The housing market has turned the corner and there is no reason to believe that buyer demand will not maintain momentum nationally throughout 2013. Household formations shot up to boom-time levels in 2012 and are projected to increase at even a faster rate over the next twelve months. A lack of inventory will be more of a challenge to sales increases than will a lack of demand.  As usual, Summit County tends to lag behind the national economy by about 18-24 months, and things have been looking more stable here, as well.

Generations X and Y Will Prove They Believe in Homeownership

Contrary to what many have hypothesized over the last few years, young adults (18-35 year olds) are just as committed to homeownership as previous generations. Recent studies have shown:

  • 43% already own a home
  • 72% see homeownership as part of their personal American Dream
  • 93% of those currently renting plan to buy a home

This, along with the increase in household formations mentioned above, makes us believe that 2013 will be the year that many of these young adults will jump into homeownership.

Prices Will Continue to Increase

Pricing of any item is determined by supply and demand. Demand for housing will remain strong throughout 2013. At the same time, the supply of homes ready for is shrinking in many parts of the country. Outside of a few states that still have challenges with large inventories of distressed properties (NY, NJ, CT, IL for example), prices will appreciate nicely.

Even in the areas that are still dealing with high percentages of foreclosures and short sales, prices will not tumble dramatically. The increase in demand will absorb much of this inventory. In these areas, prices will either flatten or perhaps soften to a small degree.

Move-Up Sellers Will Return in Great Numbers

Perhaps what many will find as the biggest surprise of 2013 will be the return of the ‘move-up’ seller. Over the last several years negative equity has prevented many of these sellers from moving up to the house of their dreams. However, with prices recovering, more and more of these sellers will realize that now may be their greatest opportunity to make the move to a lifestyle they always wanted.

With home prices expected to increase and more stringent mortgage qualifications (QR and QRM) scheduled to be announced this year, we believe that the first half of the year will bring many of these sellers/buyers to the market.  Copyright KCM crew.

 

For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours.  Want to know the value of your Summit County property? Visit www.SummitHomeValue.com  

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Contact Information

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Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
970-468-6800
800-262-8442
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker