the-american-dreamPart of the “American Dream” is to own a home. The National Association of Realtors (NAR) 2014 Profile of Home Buyers and Sellers found that the simple desire to own a home of their own was the primary motivation that people had for buying a home. People want the status and the stability of owning a home. 79% to 83% of those surveyed by NAR also said that owning a home was a good financial investment.

Harvard University published a housing study in 2013 called “The Dream Lives on: The Future of Home-ownership.” In that study, the researchers listed 5 reasons why demand for home-ownership will remain strong. Here are those 5 reasons why Harvard University believes that home ownership is a good idea.

  1. Housing is one of the only investments where you can borrow money to make money. In other words, you can get a loan to buy a home and count on the house gaining value above the loan amount over the years. No bank will lend you money to invest in stocks, but they will lend you money to buy a home knowing that the home will increase in value over the years.*
  2. Whether you buy a home or rent a home you are still consuming housing. When you own a home, you are paying your debt down with your housing payments. When you rent a home, you are paying down the landlord’s debt on the home. That is a good reason why it is better to own than rent a home.*
  3. Housing is “forced savings” for most Americans. Eric S. Belsky of Harvard University says, “owning a home can overcome people’s tendency to defer savings to another day.”* A home owner will be paying off their principle as they pay off their loan, which they can get out of the house when they sell it at a later point in time.
  4. There are major tax advantages to owning a home. A home owner can deduct the annual interest paid for the loan each year, the property taxes, and the mortgage insurance payments. A portion of your income is then not taxed as it is spent on your housing cost. That is not true for a renter. A renter cannot write-off any of their rent payments. To add to the tax benefits of owning a home is that fact that the income made off of a home sale is typically not taxed for a home owner who has lived in a home for 3 of the last 5 years, unless the gain was an exorbitant amount.*
  5. Owning a home keeps your housing payment steady. As rental prices rise, your fixed rate mortgage payment will not rise. At the end of the life of a loan, you will not have a payment on the house other than property taxes, utilities, and maintenance.*

 

A majority of American’s wealth is in their home. When one of the world’s leading scholastic institution’s research concludes that housing demands will always be present even in the middle of a recession, how can we deny the quality of investing in a home?

If you need help making the best investment of your life, call Nathan Walldorf of Herman Walldorf & Co. Realtors, Inc. at (M) 423-544-7700 or (O) 423-756-2400 or call a Realtor who you know and trust. www.SearchChattanoogaArea.com

 

*Belsky, Eric S. “The Dream Lives on: The Future of Homeownership.” The Joint Center for Housing Studies, Harvard University W13-1 (2013): 13-14. Print..

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