Homeowner’s Net Worth Is Still Greater Than a Renter’s

Homeowner’s Net Worth Is Still Greater Than a Renter’s | Simplifying The Market

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400). 

The latest survey data, covering 2014-2016 will be released later this year. In the meantime, Lawrence Yun, the National Association of Realtors’ Chief Economist estimates that the gap has widened even further, to 45 times greater ($225,000 vs. $5,000)! 

Put Your Housing Cost to Work for You

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 84% of consumers believe that purchasing a home is a good financial decision. William E. Brown comments:

“Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own. Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home. 

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!

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Millennial Homeownership Rate Increases

Millennial Homeownership Rate Increases | Simplifying The Market

Recent headlines exclaimed the homeownership rate, as reported by the Census Bureau, rose again in the second quarter of 2017. What didn’t get much attention in the reports is that the homeownership rate for American households under the age of 35 increased a full percentage point from last quarter’s 34.3% to 35.3%. Millennials proved to have the highest increase of any age group.

This came as a surprise to some considering Millennials have come to be known as the “renter” generation. However, a new study by First American, 6 Trends Poised to Reshape Homeownership Demand, revealed reasons why homeownership numbers will continue to increase for Millennials.

Millennials are the most educated generation in the U.S.

Why does that matter? First American explains:

“Our model shows that, all other factors being equal, the likelihood of homeownership increases by 3 percent for those that earn a bachelor’s degree over those with a high school degree. The likelihood of homeownership jumps another 3 percent for those that earn a graduate degree.”

The more educated, the better the likelihood for homeownership. And, as we mentioned: Millennials are the most educated generation in the U.S.

Homes & marriage go together

Marriage is a key determinate in homeownership. According to an analysis by First American, the homeownership rate is 30% higher among married couples compared to non-married households.

Millennials have put off marriage in the pursuit of higher education. As this group ages, more and more will marry and purchase a home.

Parents buy houses

According to the study:

“The homeownership rate is 1.7% higher for households with one or two children compared to households with no children, and it is 5.4 percent higher for households with three or more children.”

The report goes on to say that as Millennials grow older there may be an increase in not just marriage but also in married couples with children. That will probably also create a “corresponding” increase in homeownership demand.

Wages and the economy

The study goes on to explain that recent gains in income growth and a strengthening economy will also help all generations (including Millennials) be more willing and able to purchase a new home.

Bottom Line

We guess the time has come to announce – Here come the Millennials!!

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Be Careful Not to Get Caught in The Rental Trap!

Be Careful Not to Get Caught in The Rental Trap! | Simplifying The Market

There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by ConsumerAffairs addressed the continuous rise in rents, stating:

“The cost of putting a roof over your head continues to go up. Not only are home prices still rising, but the cost of rent rose 0.5% in June.”

Additionally, in the Joint Center for Housing Studies at Harvard University’s 2017 State of the Nation’s Housing Report, it was revealed that,

“Despite a slight improvement from 2014, fully one-third of US households paid more than 30 percent of their incomes for housing in 2015. Renters continue to be more likely to face cost burdens…the number of cost-burdened renters (21 million) considerably outstrips the number of cost-burdened owners (18 million) even though nearly two-thirds of US households own their homes.”

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent 

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

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Americans Still Believe Real Estate is Best Long-Term Investment

Americans Still Believe Real Estate is Best Long-Term Investment | Simplifying The Market

According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.

Bankrate asked Americans to answer the following question:

“What is the best way to invest money you wouldn’t need for 10 years or more?”

Real Estate came in as the top choice with 28% of all respondents (3% higher than last year), while cash investments – such as savings accounts and CD’s – came in second with 23% (the same as last year). The chart below shows the full results:

Best Investment | Simplifying The Market

The article points out several reasons for these results:

“After bottoming out at the end of 2011 following the worst housing collapse in generations, home prices have gone gangbusters recently, climbing back above their record pre-crisis levels. Prices jumped 6.6 percent during the 12 months that ended in May, according to CoreLogic.

Toss in persistently low interest rates, tax goodies that come with owning a mortgage, and the psychological payoff from planting your roots, and maybe it’s no wonder real estate remains popular.”

The article also revealed that:

“Bankrate’s Financial Security Index — based on survey questions about how people feel about their debt, savings, net worth, job security and overall financial situation — has hit its third-highest level since the poll’s inception in December 2010.”

Bottom Line

We have often written about the financial and non-financial reasons homeownership makes sense. It is nice to see that Americans still believe in homeownership as the best investment.

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Singles Are Falling for Their Dream Home First [INFOGRAPHIC]

Singles Are Falling for Their Dream Home First [INFOGRAPHIC] | Simplifying The Market

Singles Are Falling for Their Dream Home First [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • According to NAR’s Profile of Home Buyers & Sellers, the share of recent homebuyers who were single at the time of purchase held steady at 24% last year.
  • The percentage of first-time buyers who were single females rose to 17% (up from 16%), as the share of single men dropped from 11% to 8%.
  • The primary reason for buying a home amongst singles was the desire to own a home of their own (38% for women and 37% for men).

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