Blog :: 08-2018

The Net Worth of a Homeowner is 44x Greater Than A Renter!

Homeowners Net WorthEvery three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data, covering 2013-2016 was recently released.

The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

Owning a home is a great way to build family wealth

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.

That is why, for the fifth year in a row, Gallup reported that Americans picked real estate as the best long-term investment. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26% and then gold, savings accounts/CDs, or bonds.

Greater equity in your home gives you options

If you want to find out how you can use the increased equity in your home to move to a home that better fits your current lifestyle, let’s get together to discuss the process. Contact us today!

 

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    Massachusetts Real Estate: August 2018 Market Overview

    "With prices continuing to creep up, buyers are taking a stand and refusing to over pay for their largest investment." reports Linda O'Koniewski, CEO of Leading Edge Real Estate. "Sellers who are on the fence or who are waiting until the Fall to list their homes should consider listing now to avoid the influx of inventory expected after Labor Day and to ensure the highest possible sale price. With news that interest rates will stay steady in the next term, buyers are eager to get into the market before they pop."

     

    Massachusetts Real Estate July 2018


    Thinking of selling your home? Contact The Ternullo Real Estate Team today and learn how we can help!

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      Buying Is Now 26.3% Cheaper Than Renting in the US

      Happy Home BuyersThe results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting, with a traditional 30-year fixed rate mortgage, in 98 of the 100 largest metro areas in the United States.

      In the six years that Trulia has conducted this study, this is the first time that it was cheaper to rent than buy in any of the metropolitan areas.

      It’s no surprise, however, that those two metros are San Jose and San Francisco, CA, where median home prices have jumped to over $1 million dollars this year. Home values in San Jose have risen 29% in the last year, while rents have remained relatively unchanged.

      For the 98 metros where homeownership wins out, 97 of them show a double-digit advantage when buying. The range is an average of 2.0% less expensive in Honolulu (HI), all the way up to 48.9% in Detroit (MI), and 26.3% nationwide!

      Below is a map of the 100 metros that were studied. The darker the blue dot on the metro, the cheaper it is to buy there.

      The Cost of Renting versus Owning a Home

      In order to calculate the true cost of renting vs. buying, Trulia includes all assumed renting costs, including one-time costs (like security deposits), and compares them to the monthly costs of owning a home (insurance, mortgage payments, taxes, and maintenance) including one-time costs (down payments, closing costs, sale proceeds). They also assume that households stay in their home for seven years, put down a 20% down payment, and take out a 30-year fixed rate mortgage. The full methodology is included with the study results here.

      Below is a chart created with the data from the last six years of the study, showing the impact of the median home price, rental price, and 30-year fixed rate interest rate used to calculate the ‘cheaper to buy’ metric.

      Buying Remains Cheaper than Renting in the US

      In 2016, when buying was 41.3% less expensive than renting, the average mortgage rate was the driving force behind the difference. Rates this year are the highest they have been in six years which has narrowed the gap, all while home price appreciation has also been driven up by a lack of homes for sale.

      Cheryl Young, Trulia’s Chief Economist, had this to say, “One point deserves emphasizing: The ultra-costly San Francisco Bay Area is not a harbinger for the nation as a whole. While renting may outweigh buying in San Jose and San Francisco, it is unlikely that renting will tip the scales nationally anytime soon.”

      Bottom Line

      Homeownership provides many benefits beyond the financial ones. If you are one of the many renters out there who would like to evaluate your ability to buy this year, contact the Ternullo Real Estate team today and let’s get together to find your dream home.

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