Let’s consider some of the financial realities about owning a home.
In an opinion piece in the Fresno Bee newspaper, the writer made the case for why Congress should keep a tax incentive to encourage Americans to be homeowners. Regardless of your opinion on the matter, the author’s points on the financial positives of homeownership were beneficial and worth a read.
“Owning a home is one of the best ways to build long-term wealth, providing both equity accumulation and tax benefits over time. In 2013, the median net worth of homeowner families was $195,400, while the median net worth of renters was $5,400, according to the Federal Reserve.”
“Homeownership strengthens communities, encourages higher civic participation, boosts children’s educational performance, lowers crime rates, and improves health-care outcomes. Moreover, homeowners bring more stability to neighborhoods because they tend to move less often.”
“Homeownership helps provide predictability. Individuals can enjoy steady and consistent housing costs thanks to the tax incentive that allows them to own a home. That’s because a fixed-rate mortgage payment might not change for 15 to 39 years, while rents typically increase 2 to 3 percent a year.”
As the Housing Recovery Strengthens, Affordability and Other
Challenges Remain: Harvard Study
The national housing market has now regained enough momentum to provide an engine of growth for the US economy, according to The State of the Nation’s Housing report released this week by Harvard’s Joint Center for Housing Studies. However, several obstacles continue to hamper the housing recovery—in particular, the lingering pressures on homeownership, the eroding affordability of rental housing, and the growing concentration of poverty.
Making sense of the story
On the renter side, the number of cost-burdened households rose by 3.6 million from 2008 to 2014, to 21.3 million. Even more troubling, the number with severe burdens (paying more than 50 percent of income for housing) jumped by 2.1 million to a record 11.4 million.
The national homeownership rate has been on an unprecedented 10-year downtrend, sliding to just 63.7 percent in 2015. Tight mortgage credit, the decade-long falloff in incomes that is only now ending, and a limited supply of homes for sale are all keeping households—especially first-time buyers—on the sidelines.
The report finds that income inequality increased over the past decade, with households earning under $25,000 accounting for nearly 45 percent of the net growth in US households in 2005–2015.
The report finds that rent burdens are increasingly common among moderate-income households, especially in the nation’s 10 highest-cost housing markets, where three-quarters of renters earning $30,000–45,000 and half of those earning $45,000–75,000 paid at least 30 percent of their incomes for housing in 2014.
Federal assistance reaches only a quarter of those who qualify, leaving nearly 14 million
households to find housing in the private market where low-cost units are increasingly scarce.
Low-income households with cost burdens face higher rates of housing instability, more often settle for poor-quality housing, and have to sacrifice other needs—including basic nutrition, health, and safety—to pay for their housing.
The report notes that a lack of a strong federal response to the affordability crisis has left state and local governments struggling to expand rental assistance and promote construction of affordable housing in areas with access to better educational and employment opportunities.
Remodeling projects with the most bang for your buck
If you are thinking of selling your home, you may want to consider doing a remodeling project to bring in buyer interest and garner top dollar for your home sell. But what should you remodel, especially when thinking out getting the most return on your investment?
Thankfully, the CALIFORNIA ASSOCIATION OF REALTORS has complied a quick cheat-sheet for you, based on information provided by the Cost vs. Value Report 2013 by NAR and Remodeling magazine.
In order of the most cost recouped percentage-wise, here are the top 10 most cost-effective remodeling projects: