Sunday, October 4, 2015

NEW YORK TIMES EDITORIAL FOCUSES IN ON HOME OWNERSHIP AND WEALTH CREATION

They explain, "Homeownership long has been central to Americans' ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth." The Federal  Reserve chimed in with results from their own, "Survey of Consumer Finance." The Federal Reserve found that the average net worth of homeowners the last 2 years was $194,500 which was 36 times greater than the renters net worth of $5,400.  Indeed, the homeowner net worth is expected to climb this year to $218,000 and the renters to rise to $5,500.  The main reason cited for the discrepancy in net worth is the forced savings created by the month mortgage payment and that a portion goes to equity every single month.  That coupled with the tax savings of the monthly interest deduction, presents a compelling reason to buy a home if building wealth is one of your financial objectives.

WITH THAT IN MIND, THESE STATISTICS MAKE SENSE
BMO Harris Bank Home Buying Report issued the following statistics:  52% of Americans are likely to buy in the next 5 years.  Of those looking to buy, here is what they found: 1) 74% will use a Realtor - it's not finding a home that is the issue, it is navigating the contracts and disclosures and price negotiations.  2) 59% will look online  3) 37% will seek recommendations from family and friends  4) 78% plan to get preapproved for their mortgage first.  This is wise since that is one of the primary reasons one offer will win over the other is that financing is already obtained or fully approved over another buyer who has not done their due financing diligence, even if their offer is the better offer.  The Report also gave insight into those who had already bought a property:  1) 75% set a budge and 16% spent less and 13% spent more  2) 63% spent less than 6 months looking for their home  3) 8% bought without a plan to do so because a particular property caught their eye.

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