8 Great reasons to own a home

In an era of soaring housing costs, some people may wonder if buying a home is preferable to renting. According to Lawrence Yun, chief economist at the National Association of Realtors, a monthly mortgage payment can act as a kind of enforced savings plan, enabling homeowners to build a net worth approximately 40 times greater than that of renters.

In fact, the Federal Reserve Board’s 2022 Survey of Consumer Finances reports that the typical homeowner’s net worth has climbed to $396,200, compared to $10,400 for renters.

A 2023 study by the National Association of Realtors demonstrated that middle-income homeowners nationwide accumulated more than $122,000 in wealth due to their homes appreciating by 68% over the past 10 years.

Low-income homeowners managed to amass nearly $100,000 in wealth solely through home price appreciation during the last decade, while wealth for upper-income households increased by $151,000. Moreover, many cities along the Wasatch Front saw a rise in wealth exceeding $200,000 during the same period.

Here are eight reasons why owning a home is better than renting:

Appreciation

Real estate typically appreciates in value over time, providing a reliable investment that also serves as a hedge against inflation. For instance, median U.S. home prices increased significantly from $172,900 in Q4 2000 to $417,700 in Q4 2023, demonstrating an average annual appreciation rate of over 6%.

Equity

Unlike rent, which is an expense with no return, mortgage payments build equity in a property. This equity represents an ownership stake that grows with each payment, effectively functioning as a financial asset.

Tax benefits

Homeowners who itemize deductions can enjoy significant tax advantages. These include deductions for mortgage interest, property taxes up to $10,000, and certain buying costs. Consulting a tax professional can help determine the best approach for maximizing these benefits.

Savings

Owning a home serves as a forced savings plan, as part of each mortgage payment goes toward building equity. Additionally, when selling the property, IRS rules allow homeowners to exclude up to $250,000 of capital gains from taxes ($500,000 for married couples), provided certain conditions are met.

Predictability

Fixed-rate mortgages stabilize monthly payments, shielding homeowners from the rent hikes typical in many rental markets. Although property taxes and insurance costs may vary, the principal and interest payments remain constant.

Freedom

Homeownership offers complete autonomy over your living space. This freedom extends to renovations, decorations, and additions that enhance lifestyle and potentially increase the home’s value. Homeowners typically enjoy more privacy than renters, as they are not subject to landlord inspections or restrictions imposed by rental agreements.

Stability

Buying a home in a neighborhood and living there long-term can foster deeper community ties and provide a stable environment for families, which is especially beneficial for children’s educational and social development.

Investment opportunities

Homeownership allows for various investment strategies, such as renting out part of the home or the entire property, which can generate additional income and help offset mortgage costs.



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