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    Harvard: Why Owning A Home Makes Sense Financially

     

    Harvard: Why Owning A Home Makes Sense Financially | Keeping Current Matters

     

    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.”

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    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

    local professional who can help evaluate your

    ability to do so.

     

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    Burgandy Poynter

    Hi! My name is Burgandy and I’m the Listing Manager for the Shook Home Group. I was born and raised in Texas and LOVE exploring what the beautiful Pacific Northwest has to offer! My husband and his military career brought me all the way across the country and I couldn't have picked a better place to land! From start to finish, my goal is to make sure that we are exceeding our personal marks in getting your home the best marketing exposure that it can. I enjoy connecting with my clients, learning more about them and helping them reach their goal of getting their home sold! Your home is a very important financial part of your life and with me by your side, you can rest assured that it is in good hands: We will treat it and cherish it as our very own!!

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