4 Reasons You Should Be Buying a Home in Today’s Market

Posted By on January 2, 2012

f you’ve ever thought about buying a home, but decided that it was too big a financial gamble, think again. If you’re like most people, it’s possible you haven’t considered the risk of not buying! Home ownership is the single most reliable way to achieve financial security. Without it, you may find it almost impossible to gain access to the kind of capital you’ll need to support yourself in your old age, pay for your children’s education or start a new business

Home ownership among Americans has dropped alarmingly in recent years. In 2001, 68.2% of all 35 to 44 year olds owned a home. By 2010, only 65% of 35 to 44 year olds owned homes. During this same period of time, the home ownership rate dropped from 67.8% to 66.9%. According to Katherine S. Newman, author of Declining Fortunes, the Withering of the American Dream, (Basic Books), those who didn’t get into the housing market by a certain age may have Citirama Modelmade, “a misstep that may dog their heels for the rest of their lives.”

Fortunately, the pendulum has started to swing back. Since 2011, overall housing prices have started to rebound and mortgage interest rates remain at historic lows. But if, like many people, you are hesitant to jump in to the housing market because of the recent recession, you may continue to think of home ownership as something that is too risky. Here’s why that attitude could be a huge mistake.

1. You may wait a long time to see rates this low again.

Consider: Tom recently saw a house for sale, listed at $170,000.00. He will most likely need a least 3.5% down payment (or $5,950). A $164,050, 30 year mortgage at 4.0% would cost him $730.45 per month for principle, interest and mortgage insurance. He might have another $160.00 per month for real estate taxes and homeowners insurance for a total payment of $890.35. Tom is hesitating. He feels that $890.35 per month is a stretch for his new house, since he’s only paying $725.00 a month for his rental. But if he waits and prices and mortgage rates rebound to the levels of just a few short years ago, the exact same home might cost him $180,000.00, and he could be paying a 5% interest rate, or higher! He’d be stuck with a total mortgage payment of over $1,094.46! Plus, he’d have to come up with another $350 in down payment.

2. Renting deprives you of big tax breaks.

Home ownership is one of the last remaining tax shelters. In the example above, Tom would be able to deduct over Potterhill Homes Interiors$7,000 in mortgage interest and real estate taxes on his annual tax return. He earns $45,000.00 a year and is in the combined 31% tax bracket. Therefore, his savings would come to about $2,450.00 a year, or almost an additional $204.17 in take-home pay EACH MONTH! If he rents, he’ll get no tax breaks whatsoever. For Tom, home ownership is actually less expensive than renting!

3. You need to start somewhere to be able to trade up.

You may feel there will be plenty of time to get into the housing market when you feel more financially secure. The problem is, you’ll probably need the profit you’ll make by selling your “starter home” to be able to afford the one you’ll want in the future. Between 2002 & 2012, the median price of a single family home rose from $228,700 to $267,900, according to the US Census Bureau. And just 20 years ago in 1992, the median home price was $144,100. And even though home prices declined between 2007-2011, home prices have stabilized and are once again climbing. Homeownership is still a great investment. That’s great if you buy early and hang on to your purchase. If you don’t, you’ll have to keep up with those increases through other investments, which is generally difficult to do. You’ve got to “jump in” sometime, and there just hasn’t been a better time in many, many years.

4. Your future is going to be expensive.

Financial experts generally suggest that to retire, you’ll need to build up enough in savings and investments to generate Hopewell Valley Modelyearly income equal to 70% of your pre-retirement income. That’s a tall order and reason enough to start amassing some serious capital and soon. For most people, your home is your biggest and most productive asset.

Potterhill Homes’ professional housing consultants are here to help navigate the purchase of your new home. We’re here when you are ready to pursue the American Dream!

 

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About the author

As the people behind Potterhill Homes, we have some pretty strong feelings about energy efficiency and green building. And we don't always agree! But we are commited to building a best homes we can and bringing you along on our journey to figure out exactly what that means! Thanks for checking out our site. My Google Profile+

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About Potterhill Homes

Cincinnati-based Potterhill Homes is a premier builder of affordable, environmentally friendly homes in Greater Cincinnati. Our homes are built with traditional Cincinnati architectural styles and are perfect for both urban infill and suburban development. To learn more about Potterhill Homes,visit www.potterhillhomes.com.


About the authors

As the people behind Potterhill Homes, we have some pretty strong feelings about energy efficiency and green building. And we don't always agree! But we are commited to building a best homes we can and bringing you along on our journey to figure out exactly what that means! Thanks for checking out our site. My Google Profile+