Eric Belsky is Managing Director of the Joint Center of Housing Studies at Harvard University. He also currently serves on the editorial board of the Journal of Housing Research and Housing Policy Debate. This year he released a new 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
Belsky's insights underscore homeownership as a strategic financial move, not just a lifestyle choice. The combination of leverage, forced savings, tax advantages, and inflation protection makes buying a home a smart and secure long-term investment in most markets. By owning, you're not just creating a place to live, but also building equity, benefiting from tax breaks, and protecting yourself against the rising costs of housing.
If you’ve been considering making the leap into homeownership, now is the time to explore your options. With interest rates fluctuating and housing prices steadily rising, locking in your home purchase sooner rather than later could maximize your financial benefits. Reach out today for a consultation to discuss how homeownership can help you build long-term wealth and secure your financial future. We’re here to guide you through the process and find the perfect home for your needs!
Start Your Home Search Here
With Shane & Anne, our mission is to prioritize our clients in every aspect of the real estate journey. We are committed to providing exceptional service and expertise in the luxury real estate market. Guided by our core values, we strive to build lasting relationships based on trust and mutual respect.
Our Core Values:
Loyalty: We are unwavering in our commitment to our clients, always putting their needs and interests first.
Honesty: We operate with the highest level of integrity, providing truthful and transparent communication at every step.
Confidentiality: We respect our clients' privacy and handle all transactions with the utmost discretion.
We are committed to staying ahead of market trends and continuously enhancing our skills and knowledge to deliver unparalleled results. Our goal is to make the real estate experience as smooth and rewarding as possible, ultimately helping our clients achieve their real estate dreams.
Individual Market Analysis for Eastside Cities (Live Statistics):
Sammamish:
Active Listings: Significant year-over-year increase in active listings.
New Listings: Higher number of new listings added in June 2024 compared to last year.
Pending Sales: Stable pending sales indicating steady buyer interest.
Redmond:
Active Listings: Increase in the number of properties listed for sale.
New Listings: A notable rise in new listings, reflecting active seller participation.
Pending Sales: Slight decrease in pending sales, possibly due to fluctuating mortgage rates.
Bellevue:
Active Listings: Substantial increase in active listings year-over-year.
New Listings: A significant influx of new listings in June 2024.
Pending Sales: Stable pending sales, showing consistent buyer interest.
Mercer Island:
Active Listings: Increase in the number of active listings.
New Listings: Higher number of new listings indicating seller confidence.
Pending Sales: Slightly lower pending sales, influenced by market conditions.
Kirkland:
Active Listings: Growth in the number of active listings.
New Listings: Increase in new listings compared to last year.
Pending Sales: Stable pending sales, with consistent market activity.