Every family has a list of important dates like birthdays & anniversaries. For some, that includes the day they purchased their home.
That date is important because homeownership is not just a roof over your head. It also represents stability, wealth, and even pride! Homeownership continues to be a part of the “American Dream” as it has been for years.
BENEFITS OF HOMEOWNERSHIP
There are several obvious, financial benefits to owning a home. But do you know there are non-financial benefits also? Let’s dig deeper into both.
- Educational Achievement. Homeownership makes a significant positive impact on academic achievement. The decision to stay in school by teens, lower incidence of teenage pregnancy, higher levels of achievement in both reading and math in younger children, fewer behavioral problems, and more supportive environment from parents have all been associated with those who own their home versus rent.
- Civic Participation. “Homeowners have a greater financial stake in their neighborhoods than renters.” Homeowners add some stability to the neighborhood, are more politically active, have a stronger connection to their neighborhood, and volunteer more.
- Health Advantages. Homeownership has a positive impact on both physical and psychological health. Adjusting for a range of demographic, socioeconomic and housing-related characteristics, homeowners have a significant health advantage over renters. Homeowners report higher self-esteem, higher happiness, and lower waist circumference than renters.
- Public Assistance. Homeowners living in a stable neighborhood require less public assistance. Having access to home equity credit lines enables homeowners to adjust to job layoffs better, reducing their need for public assistance. 47% of homeowners indicated that they have used home equity to pay off other debts, such as credit cards, auto loans, student loans, or medical bills.
- Property Maintenance and Improvement. A well-maintained home not only generates benefits through consumption and safety, but a high-quality structure also raises mental health.
- Pride of Ownership. This place is uniquely yours. You can customize it according to your likes and personality. Ownership entails greater individual responsibility and it comes with a sense of belonging in the community.
- Appreciation. On average, home prices are expected to appreciate annually at a rate of 3.5-4% in the upcoming years, according to Steve Harney, a residential real estate expert who specializes in market trends. Constant appreciation helps to create long-term savings which translates into equity and a safety net.
- Home Equity. Equity is the amount of value in an asset. Homeowners contribute to a physical asset that they own versus paying for a landlord’s asset. If you have a mortgage, as the mortgage is paid every month, the debt reduces while equity increases, as long as the value remains the same or increases as well. Equity can later be tapped into and used for a plethora of reasons for homeowners.
- Savings. Equity in your home is money for your future. And if you have a mortgage, it is like a forced savings plan. With each mortgage payment, the principal of the loan is being reduced. Whether you need to tap into the equity to pay down bills or use for retirement down the road, you create savings when you own a home.
- Build Wealth. As equity increases in a property, homeowners have the opportunity to sell for a profit. The money could be used to buy a new home or an additional second home or investment property. Furthermore, a homeowners’ net worth is over 44x greater than that of a renter according to the Federal Reserve’s Survey of Consumer Finances (2013-2016 data). This gives you options including the financial freedom to save, invest, and grow.
- Stability. Homeowners have much more wealth than renters. Rent prices increase an average of 4% annually. For homeowners, a fixed mortgage payment allows you to save for future projects, guard against inflation, and reap the rewards of appreciation year over year.
- Tax Advantages. There are tax benefits to encourage homeownership. Talk to your CPA to see which benefits apply to youbefore buying, selling, or refinancing a home.
Owning a home is an investment in your future! As you can see there are many financial and non-financial benefits to take advantage of when owning a home. If you are considering selling a home and/or buying a new home, let’s talk!
*Non-Financial benefits quoted according to recent research article published by the National Association of Realtors (NAR).