Live the Dream of Homeownership
Many people dream of homeownership. Most would even consider it paramount to the American Dream. Since the 1920's, various groups and organizations have recognized the importance of homeownership in this country. The National Association of REALTORS® first officially celebrated the concept in 1956. In 2002, President George W. Bush proclaimed June as National Homeownership Month.
The Importance of Homeownership
Homeownership brings many benefits to individuals. Owning a home can represent stability and financial success. There is also an important element of making a positive contribution to the local community. There are financial and social benefits of home ownership as well as tax benefits.
Financial Benefits of Homeownership
Financial benefits are probably the most obvious benefits of owning a home. Buying a home is a significant investment up front, but it is one of the best ways to build wealth and create long-term savings.
- You Build Equity: Most homeowners purchase their home with a mortgage from a financial institution. When a homeowner makes their monthly payment the balance of their mortgage is reduced and equity is created. Equity = the Value of Your Home - the Balance of Your Mortgage. This is why, in most cases, buying a home is more financial savvy than renting, which basically paying the landlord's mortgage for them.
- You Save for the Long-Term: When you build equity in your home, you are essentially saving for your future. Your can use your home equity for your future retirement, which promotes financial stability.
- You Build Wealth: As your home goes up in value, your equity increases as well. With the increased equity, you could sell the home for a profit and invest in a new home.
Social Benefits of Homeownership
In addition to the financial benefits, homeownership benefits socially as well. Buying a home helps a person to feel accomplished benefiting them mentally. But a lot of folks miss how it benefits the community around you.
- You Help Make the Neighborhood Stable: Unlike most renters, homeowners usually stay in a property for longer periods of time, which adds to the stability of a neighborhood.
- Financial Education: Parents who display the financial responsibility of owning a home, can educate their children on making decisions to ensure their financial success, which further benefits the communities where they live.
- You're Healthier: A National Association of Realtors study on the Social Benefits of Homeownership and Stable Housing shows that homeowners believe they are in better health than non-homeowners. The study also shows homeowners have a higher self-esteem and happiness compared to renters.
- Lower Crime Rates: A neighborhood full of homeowners is generally safer than a rental neighborhood, because homeowners have more incentive to keep the area safe. They are vested in the area with owning a home. In general, states with higher homeownership rates have lower crime rates.
- Property Improvements: A great benefit of homeownership is that you can customize the home how you like it. And many times these improvements can increase the value of your home. Generally, owner-occupied homes are maintained better than rental properties because of pride of ownership.
Tax Benefits of Homeownership
Tax benefits of homeownership go back over 100 years. The mortgage-interest deduction is probably the most well known tax benefit, but there others you should be aware of.
- Mortgage Interest Deduction: The interest you pay on your mortgage, which is higher in the first years after you've purchased your home, is fully tax deductible. This means homeowners can lower their taxable income.
- Property Tax Deduction: Depending on the state and county you live in, there are also property tax deductions available. In North Carolina, you can deduct your property taxes on your state taxes.
- Profits from Home Sale: Homeowners are in most cases exempt up to $250,000 after selling their personal residence. There are certain eligibility requirements, but for the most part homeowners can benefit from the gain of selling their personal home.
Summary of Homeownership
Interest rates have remained low over the last few years, which has helped many people become homeowners for the first time. However, home values have been rising faster than wages, which does create challenges for homeownership. Additionally, there has been a shortage of homes for sale (inventory) across the country. That is evident here in the Triad area for sure as homes in many areas, including the Lewisville-Clemmons area, are selling in less than 30 days with multiple offers. All in all, homeownership in the first quarter of 2019 is at 64.2% according to the U.S. Department of Commerce.
If you or someone you know has questions about becoming a home owner, please have them contact us. Call or text 336.462.9544. Our friendly real estate agents are here to help!