Every year, households across the country make the decision to rent for another year or take the leap into homeownership. They evaluate their earnings and savings and then decide what makes the most financial sense. That equation will most likely take into consideration monthly housing costs, tax advantages, and other incremental expenses. Using these measurements, recent studies show that it is still more affordable to own than rent in most of the country. There is a cost to not owning a home.
There is, however, another financial advantage to owning a home that is often forgotten in the analysis – the wealth built through equity when you own a home.
Odeta Kushi, Deputy Chief Economist for First American, discusses this point:
“Once you include the equity benefit of price appreciation, owning made more financial sense than renting in 48 out of the 50 top markets, with the only exceptions being San Francisco and
San Jose, California”
What has this equity piece meant to homeowners in the past?
ATTOM Data Solutions, the curator of one of the nation’s premier property databases, just analyzed the typical home-price gain owners nationwide enjoyed when they sold their homes. Here is a breakdown of their findings:
The typical gain in the sale of the home (equity) has increased significantly over the
last five years.
According to CoreLogic’s Homeowner Equity Insights Report, the average homeowner gained $17,000 in equity in 2020 alone.
What does the future look like for homeowners when it comes to equity?
Here are the seven major home price appreciation forecasts for 2021:
The National Association of Realtors (NAR) just reported the median-priced home in the country sells for $309,800. If homes appreciate by 5% this year (the average of the forecasts), the homeowner will increase their wealth by $15,490 in 2021 through increased equity.
As you make your plans for the coming year, be sure to consider the equity benefits of home price appreciation as you weigh the financial advantages of buying over renting. When you do, you may find this is the perfect time to jump into homeownership.Your first steps to buying a home, are to talk to a mortgage lender to get preapproved and to talk to a realtor who is not only an expert on the region, but knowledgeable about how to use real estate to build your financial future. It is an unprecedented time in real estate and with low interest rates, there has never been a better time to buy. Buying a home can seem overwhelming, but it can be exciting with the right team supporting you. If you are interested in buying a home, call Tim today at 202-800-0800 or email him at info@PiersonRealEstate.com.