There's Still Value in Homeownership

Provided by Realty Times

It may be a down market, but the majority of Americans still see value in homeownership.
According to a recent survey, conducted on behalf of the National Association of Home Builders (NAHB), "An overwhelming 75 percent of the people who were polled said that owning a home is worth the risk of the fluctuations in the market, and 95 percent of the home owners said they are happy with their decision to own a home."


There is good reason for homeowners to feel this way. Homeownership offers people a wide range of benefits, including many that reside outside your pocketbook. The first benefit is stability. According to the National Association of Realtors (NAR) and their 2010 study named "Social Benefits of Stable Housing," "Homeownership and stable housing go hand-in-hand. Homeowners move far less frequently than renters, and hence are embedded into the same neighborhood and community for a longer period. "

This stability has far-reaching affects. Studies have revealed that children of homeowners are more likely to graduate and less likely to live in areas with high crime rates. Responsibility is also passed down to the next generation. Daughters of homeowners have a lower incidence of teen pregnancy.

According to the survey, "First, a home purchase naturally involves one of the largest financial commitments most households will undertake. Homeowners, therefore, tend to minimize bad behavior by their children and those of their neighbors that can negatively impact the value of homes in their neighborhood. Second, homeowners are required to take on a greater responsibility such as home maintenance and acquiring the financial skills to handle mortgage payments. These life management skills may get transferred to their children."


Homeownership even affects our health. This same NAR study found that homeowners report higher levels of physical health, even after the study adjusted for age and socioeconomic factors. "In addition to being more satisfied with their own personal situation than renters," says the study, "homeowners also enjoy better physical and psychological health."



Owning your home gives you stability. Eventually, if a homeowner buys within their means, even the longest of mortgages gets paid off. This makes your home one of your greatest retirement assets.


According to Celinda Lake, president of Lake Research Partners. "People believe overwhelmingly that owning a home is an anchor to the American Dream," she said. "It's an anchor to your retirement, and it's an anchor to your personal economic well-being."



"Homeownership is worth the risk, pure and simple," said Neil Newhouse, a partner and co-founder of Public Opinion Strategies. "Even though the market is weak, people who don't own say they want to buy a house. Almost three-quarters of those who do not currently own a home, 73 percent, said owning a home is one of their goals. And among younger voters who are most likely to be in the market for a home in the next few years, the percentages are even higher."


This is why 80 percent of owners would recommend homeownership to those they know. If you're in the market, maybe it's time you took listened to their advice! Historically low interest rates and high rates of affordability make now a great time to buy.

Americans Prefer Owning Over Renting

Provided By Realtor Mag
Source Fannie Mae National Housing Survey

Safety and educational quality are among the reasons why 65 percent of Americans would rather own a home than rent one, according to Fannie Mae's national housing survey.

Of those Americans, 43 percent state that safety is a primary reason to buy, and 33 percent say they think schools are better in neighborhoods where most homes are owned by their residents.

However, buyers and renters are more cautious in today’s economic climate than in the past, according to the survey, with 23 percent of renters reporting that they will buy a home but later than they once thought.

A full 70 percent of respondents believe buying a home is one of the safest investments available, but 60 percent think that it will be more difficult for them to secure a mortgage than it was for their parents.

Are you interested in owning a home? Please contact us at 972-772-7000 or email us at rockwall@kw.com.

10 Ways to Increase the Value of Your Home

By Katie Adams

This article is part of a series related to being Financially Fit

In a dour housing market, wouldn't it be nice to know that your remodeling project would pay off when you went to sell the property? Remodeling Magazine evaluated the top remodeling projects, how the cost-to-value has changed since the housing market implosion, and which projects are still worth the investment. Using the magazine's "Cost Vs. Value Report for 2008-2009," let's look at some of the best projects you can undertake and recoup the majority of your cost.


Upscale Projects

Siding Replacement (fiber-cement or foam-backed vinyl). With the economic slump, home buyers aren't being dazzled by bells and whistles as much as they are improvements that will ensure lower repair and utility bills. Although replacing current siding with fiber-cement has lost value from 2007, it still nets an astonishing 87% ROI. If you prefer a foam-backed vinyl product replacement instead, you can still look to recoup 80% of your cost.

Window Replacement (vinyl or wood). Windows are not only an aesthetic feature. For most homeowners, they represent one of the easiest ways to lower home heating and cooling bills. By replacing your current windows with more efficient vinyl or wood ones, you can save on your utility bills, attract future home buyers and net a nearly 80% (vinyl) or 77% (wood) return on your investment.

Bathroom Remodel. Depending on the size and amenities of your desired bathroom, you could expect to pay over $50,000 to tear out walls, repair joists and wall studs, change structural elements and make major layout changes, such as switching a toilet and shower. However big the price tag, you can still expect to recoup nearly 71% of the cost (which would be $36,400 if you have a $50K bill) when you go to sell. This project increased its value since 2007, while its sister project – adding a complete bathroom – fell in value.

Major Kitchen Remodel. Kitchens are typically the most frequently used room in a home, so it makes sense that investing money here is going to pay off when it comes time to sell. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it's also one of the most profitable. Regardless of the size of your financial layout, you can expect to get a nearly 71% ROI.

Deck Addition (composite product). With families cutting their entertainment budgets, they're spending more time at home, so it makes sense that adding a deck (composite, not wood) is a good investment. You can plan on recouping 63% of your total job cost to boost your home's value by nearly $24,000 if you paid the average job cost of $37,000.

Mid-Range Projects

While all of the mid-range projects dropped in value versus cost since 2007, there are still numerous projects that will net you a significant ROI. Here are a few of the best bets for your money:

Deck Addition (wood). If your bank balance can't swing the higher price tag that comes with composite decking, you may still be able to afford a wood addition on to your home. While a wood deck would cost you, on average, in the neighborhood of $10,000, the resale value it will add to your home is more than $8,600 – an 81.8% return on your investment.

Siding Replacement (vinyl). Fiber-cement or foam-banked vinyl are often more preferable siding upgrades, but getting vinyl siding replacements instead is still a good choice. You can recoup nearly 81% of your cost which, if the job cost you more than $10,000, means you could add more than $8,200 to your home's value.

Minor Kitchen Remodel. With belt-tightening in style, people are turning to minor kitchen improvement projects instead of major overhauls. It turns out that that choice is not only frugal, but financially wise. While major kitchen remodeling jobs can still, on average, return a nice 70% ROI for homeowners, minor kitchen remodeling jobs net an even higher 79.5% return.

Attic Bedroom. Anytime you can add bedrooms, you're going to add to the overall value – and listed purchase price – to your home. If your attic's dimensions allow you to convert it to a bedroom, you may want to consider investing the money to do so. You'll add some sleeping space and net a nice 74% return when a new buyer puts your home under contract.

Basement Remodel. If you're fortunate enough to live in an area with a water table high enough to permit basements, you should think about squeezing all the value you can out of it. By remodeling and finishing a previously-unfinished basement you can expect to get nearly 73% of your investment returned with a higher list price, come time to sell.

Conclusion

If you have savings or access to reasonably-priced credit, it's worth it to consider home improvement projects that will produce the best return for your time and money. Make sure you work with a reputable, licensed contractor (to avoid costly errors or budget overruns), and before you undertake any project it's a good idea to check and see if it could significantly increase your property tax bill.

While it may still make sense in the long-run to undertake the project and add overall value to your home, you may need to make a few budgetary changes so that you don't get caught off-guard when the tax bill comes.

Rent or Buy?

By Mary Dalrymple
Provided By The Motley Fool Green Light


Home prices, mortgage rates, and housing bubbles have gotten their fair share of print in the news lately. If you're a renter wondering whether to take the leap into homeownership, it may all seem a little overwhelming.


When considering whether it's better to remain a renter and let your landlord fix the plumbing leaks, your area's real estate market should be one consideration. But it's not the only one, and it may not be the most important one. Here are some things to ask yourself when considering whether to become a homeowner.

Will you remain in the house for more than a few years?

Housing prices have definitely skyrocketed in many regions, but that doesn't mean they'll stay on that path forever. A few areas have seen prices starting to decline. That can be great when you're the buyer, but not necessarily when you're the owner.

You'll want to stay in your home long enough to at least recoup your buying costs. If you know you'll move in fewer than three years, your house may not have appreciated enough to cover those expenses. You may want to plan on staying at least three to five years to give yourself more time to cover your costs.

How does it compare with renting?

When renting, it's easy to calculate whether a new apartment will fit in your budget. Just ask about the monthly rent and the average utilities. Once you start thinking about buying a home, this calculation gets a lot more complicated.

Luckily, there's a handy Motley Fool calculator that will tell you whether you're better off renting. As you'll see from the questions the calculator asks, this equation depends on the expected appreciation of your home, your tax rate, your mortgage interest rate, your homeowners' insurance, and your property taxes, to name a few things.

What else would you do with the money?

If you purchase a home, you may shell out more each month for your housing costs. That doesn't mean it's better to remain a renter. You're likely to get a discount on some of those costs, including mortgage interest and property taxes, through various tax deductions.

Also, your mortgage payments won't climb every year with inflation, the way your rent can. (Unfortunately, the same can't always be said of your property taxes.) When you pay your mortgage each month, you're building equity in your house. When you pay your landlord each month -- and he keeps raising the rent -- you're not gaining anything but the same old apartment, for more money.

On the other hand, homes require some upkeep and maintenance, which can get expensive. Depending on the real estate market in your area, you may find no advantages to buying a house. Maybe you're better off investing your money and improving your financial situation through stock ownership, instead of real estate.

Can you place a down payment?

To get the best mortgage arrangement, you'll want to be able to put down 20% of the purchase price of the home. You can get a multitude of arrangements that let you avoid that down payment, but some can be costly. You'll either have to pay private mortgage insurance to protect the lender in the event that you default, or you'll need a second loan that will probably come at a higher interest rate.

There are many programs around to help people, especially first-time homebuyers, who cannot put down the traditional 20% down payment. You may qualify for one of these arrangements. In the meantime, consider whether you'd rather rent longer and save more money toward a down payment.

How do you feel about homeownership?

Some people cannot wait to paint the white picket fence and plant daisies, while others dread the idea of doing their own maintenance chores. If you know exactly where you stand on that question, there may be no debate about whether you should keep renting or start home-hunting.

Copyrighted, The Motley Fool. All rights reserved.

10 Steps to Home Ownership

Step 1: Are You Ready?

You Know What You Want?
Whether you are a first-time home buyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy. Are you planning to move to a new community due to a lifestyle change or is buying an option and not a requirement? What would you like in terms of real estate that you do not now have? Do you have a purchasing timeframe?
Whatever your answers, the more you know about the real estate marketplace, the more likely you are to effectively define your goals. As an interesting exercise, it can be worthwhile to look at the questions above and to then discuss them in detail when meeting with local REALTORS®.

Do You Have The Money?
Homes and financing are closely intertwined. (Financing is the difference between the purchase price and the down payment, commonly referred to as debt or the mortgage.) The good news is that over the years new and innovative loan programs have evolved which require a 5 percent down payment or less. In fact, a number of programs now allow purchasers to buy real estate with nothing down.

In addition to a down payment, purchasers also need cash for closing costs (the final costs associated with closing the loan). Several newly emerging loan programs not only allow the purchase of a home with no money down, but also underwrite closing costs.
Not everyone, however, elects to purchase with little or no money down. Less money down means higher monthly mortgage payments, so most home buyers choose to buy with some cash up front.

As to closing costs, in markets where buyers have leverage, it may be possible to negotiate an offer for a home that requires the owner to pay some or all of your settlement expenses. Speak with local REALTORS® for details.

Is Your Financial House in Order?
Those great loans with little or nothing down are not available to everyone: You need good credit. For at least one year prior to purchasing a home, you should assure that every credit card bill, rent check, car payment and other debt is paid in full and on time.

From realtor.com