Five Reasons Why Homeownership Is A Good Financial Investment

According to a recent report by Trulia, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.” That may have some thinking about buying a home instead of signing another lease extension. But, does that make sense from a financial perspective?

In the report, Ralph McLaughlin, Trulia’s Chief Economist explains:

“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

The report listed five reasons why owning a home makes financial sense:

1. Mortgage payments can be fixed while rents go up.
2. Equity in your home can be a financial resource later.
3. You can build wealth without paying capital gains.
4. A mortgage can act as a forced savings account.
5. Overall, homeowners can enjoy greater wealth growth than renters.

Bottom Line

Before you sign another lease, perhaps you should sit with a real estate professional in your area to better understand all your options.

Home Sales Continue To Rise

Existing Home Sales Hit 2nd Highest Figure Since June

Mortgage interest rates remained well below 4% in September at 3.46%, prompting existing home sales to stay at a healthy annual pace of 5.47 million. Month-over-month sales were up 3.2%.

Inventory of homes for sale remains below the 6-month supply that is necessary for a normal market, as it fell 2.2% to a 4.5-month supply. The shortage in inventory has contributed to the median home price rising an additional 5.6% to $234,200.

NAR’s Chief Economist, Lawrence Yun had this to say about the lack of inventory:

"Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in."

There is good news though, as Yun went on to say:

"There's hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring. The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the home ownership rate."  

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Bottom Line

If you are debating putting your home on the market this year, now may be the time. Buyers are still out there looking for their dream home. Let’s get together to determine your best plan.