Why Homeownership still pays
May 29th, 2009 categories: My Market Opinions
It would be an understatement for me to say many Americans have taken a hit to their home equity over the past two or three years, and some may wonder if owning a home is really the smartest financial decision. GOOD NEWS!-a recent analysis of Federal Reserve data by the National Association of Realtors (NAR) shows the answer is YES!
In comparison with renters, homeowners have much greater household wealth. Owner’s wealth exceeds that of renters by a factor of 50-to-1: a median of $205,200 versus a median of $4,200. The main wealth difference between the two is home equity, of course. Even for households who’ve owned their home only since 2003, home equity gains are the rule rather than the exception.
In all 150 markets tracked by NAR, including hard-hit markets, households who’ve owned their home for 10, 15 and 20 years have uniformly enjoyed strong equity gains depsite the recent downturn.
The data in this graph clearly shows that homeownership remains the biggest store of wealth for the typical household, even when markets are buffeted by some admittedly very rocky years.
And let’s not forget the incentive the government is giving 1st time home buyers, and $8,000 tax credit that does not have to be repaid if you live in the home at least three years, and you can now use it for a downpayment! BUT! You must purchase a home by December 1, 2009 to take advantage of this.
If you’re weighing all your options and considering buying this year, I hope the data here will settle any fears if homeownership still makes any sense.
