How Owning a Home Builds Your Net Worth

Owning a home is a major financial milestone and an achievement to take pride in.

One major reason: the equity you build as a homeowner gives your net worth a big boost. And with high inflation right now, the link between owning your home and building your wealth is especially important.

If you’re looking to increase your financial security, here’s why now could be a good time to start on your journey toward homeownership.

Owning a Home Is a Key Ingredient for Financial Success

A report from the National Association of Realtors (NAR) details several homeownership trends, including a significant gap in net worth between homeowners and renters. It finds:

“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”

To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter’s. This difference shows owning a home is a key step in achieving financial success.

Equity Gains Can Substantially Boost a Homeowner’s Net Worth

The net worth gap between owners and renters exists in large part because homeowners build equity. When you own a home, your equity grows as your home appreciates in value and you make your mortgage payments each month. As a renter, you don’t have that same opportunity. A recent article from CNET explains:

“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home . . . When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”

But on top of that, your home equity grows even more as your home appreciates in value over time. That has a major impact on the wealth you build, as a recent article from Bankrate notes:

“Building home equity can help you increase your wealth over time, . . . A home is one of the only assets that have the potential to appreciate in value as you pay it down.”

In other words, when you own your home, you have the advantage of your mortgage payment acting as a contribution to a forced savings account that grows in value as your home does. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.

Bottom Line

Owning a home is an important part of building your net worth. If you’re ready to start on your journey to homeownership, connect with a trusted real estate advisor today.

Read more on Keeping Current Matters.

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• Americans are deeply pessimistic about the housing marketGoogle searches for “sell my house” explode

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Americans are deeply pessimistic about the housing market

Price corrections in the housing market may incentivize homebuyers, home-sellers to remain on the sidelines: Fannie Mae.

Home prices have started to drop, but the decline has not been significant enough to slow a growing pessimism about the housing market.

Fannie Mae’s Home Purchase Sentiment Index (HPSI), which tracks the housing market and consumer confidence to sell or buy a home, dropped by 0.8 points in August to 62, marking its sixth consecutive decline. The government-sponsored enterprise attributed high home prices and mortgage rates to the decline, particularly weighing on home-selling sentiment. Year over year, the index is down 13.7 points.

On the seller side, 35% said it was a bad time to sell, rising from 27% in July. About 59% said it’s a good time to sell, dropping from the previous month’s 67%. 

“The share of consumers expecting home prices to go down over the next year increased substantially in August. Accompanying this, HPSI respondents reported a significant decrease in home-selling sentiment,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist. 

Following a slow down in home price appreciation, prices slipped 0.77% in July from June, marking the largest single-month decline in the housing market since January 2011, according to Black Knight. About 85% of major housing markets, mainly in the West Coast, saw prices pull back from their peak levels, and more price corrections are expected across the U.S.

“We also observed a large decline in consumers reporting high home prices as the primary reason for it being a good time to sell a home, suggesting that expectations of slowing or declining home prices have begun to negatively affect selling sentiment,” Duncan said. 

On the other hand, lower home prices would be welcome news for potential first-time homebuyers, who are disproportionately affected by high home prices and high mortgage rates.

Overall, 22% of respondents said it was a good time to buy a home in August, up from 17% a month prior, but 73% said it was a bad time to buy, down from 76% in July.

Consumers were not optimistic about mortgage rates. About 11% of respondents said that mortgage rates will go down in the next 12 months while 61% stated that mortgage rates will go up.

Mortgage rates have been on a rising trend in recent weeks ahead of another potential rate hike by the Federal Reserve later this month. Purchase mortgage rates rose to an average of 5.89% this week. 

“With home prices expected to moderate over the forecast horizon and economic uncertainty heightened, both homebuyers and home-sellers may be incentivized to remain on the sidelines – homebuyers anticipating home price declines and potential home-sellers not keen to give up their lower, fixed mortgage rate – contributing to a further cooling in home sales through the end of the year,” Duncan said.

Goldman Sachs, in a paper titled “The Housing Downturn: Further to Fall,” forecasted that new and existing home sales are going to fall 22% and 17% respectively this year. Next year, the investment predicted new and existing home sales will drop another 8% and 14%.

For more info like this, visit Housing Wire.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Why You Should Hire a Plumber After Moving to an Old House

Moving to an old house can cause some serious headaches and disruptions.

Your furniture might shift, your dishwasher might stop working correctly, and you might find yourself living with a leaking water line. With all the repairs you need to take care of while still trying to make a normal life in your new place, it's easy to get overwhelmed with the task. Hiring a plumber seems like a real luxury since you're already stretched thin by all your other home repairs. But if you want to be able to relax in your new house and enjoy it, as opposed to being frustrated with it, hiring a plumber is definitely worth the cost. 

An Old House Needs Special Attention
An old house needs special attention. It's built differently than a new one and has been used for far longer. In short, all of your plumbing is older than it was when it was first installed. That's both a good thing and a bad thing. Good because you should be able to make the most of your plumbing systems by adding modern updates with new technology and appliances. Bad because you can't just hire a handyperson to come in and fix your plumbing for you because it needs someone that knows what they're doing. Often, old houses will have pipes that aren't up to code. They might be too small or might lead to the wrong places. Either way, you're going to run into problems eventually, so it's best to know how serious they are when they happen instead of just waiting for them.

Professional Plumbers Have the Experience You Need
Professional plumbers have the experience you need. There's no way around it. An old house contains older plumbing, and that can lead to a host of complications that can be solved by someone who has experience dealing with older systems. Maybe your drain is clogged because the pipes underneath your bathroom sink are too small for all the hair being washed down. Or maybe your dishwasher is broken because there isn't a proper vent in place, leading to an overflow during a power outage. A company like Spartan Plumbing and Services has the experience you need to fix any problem. 

Special Plumbing Requirements
If you have an old house, it probably has the bonus of being historic. That means it's especially important to be in top condition since you want people to come and see how well you've kept it! But if you ignore your plumbing, your house won't look great. That's because old houses were built before the era of modern convenience. For example, they don't have an automatic water heater and don't have central air. These things were invented to meet one major problem: high heating and cooling costs. If you want to save money on your utilities, it's best to use a plumber to create a system that will meet your needs.

If you want to enjoy the house you bought, it's wise to look at your plumbing. Taking care of that work yourself can be reasonable, but using someone with much more experience can do more for your pocketbook and make you more relaxed in your new home.

Get more like this on RISMedia.

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Google searches for “sell my house” explode

It looks like inventory is about to get a boost.

An analysis of Google search data reveals that searches for ‘sell my house’ exploded 147% in the United States as of July 2022 — the highest level in internet history for America, according to luxury real estate platform RubyHome.

This comes as Americans face rising property and rent costs, with fears of a recession looming.

The analysis reveals that searches for ‘sell my house’ more than doubled within the past month, a huge increase in Americans looking to sell their property, according to Google search data analysis. The data also reveals that searches for ‘sell my house for cash’ are also at an all-time high.   

This comes at a time where the U.S. housing market sees mortgage rates doubling from this time last year (5.5% up from 2.8%), and, according to Zillow, the average house price in America is up 20.7% on last year at $350,000.

The top ten states searching to sell their house the most are:

1. Mississippi

2. Connecticut

3. Virginia

4. Wyoming

5. Florida

6. Iowa

7. New Mexico

8. North Carolina

9. New York

10. Kentucky

“With the rate of inflation skyrocketing in recent years, the value of a house has increased massively, meaning homeowners and sellers are in a prime position to reap the benefits, especially with any money left over from selling a property being able to help towards the growing costs of everyday items,” said a RubyHome spokesperson.

They added, “With Zillow’s report that the average house price in America has risen 20.7% from last year, it is clear to see why Americans are tempted to sell at this time.  However, with affordable housing becoming increasingly challenging to come across throughout America, it will be interesting to see if these figures translate into actual sales and what this may mean for the housing market.” 

Keep reading on Real Trends.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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A 'housing recession' won't bring home prices down, economist says

Despite talk of a "housing recession," don't hold your breath waiting for home prices to suddenly decline any time soon. In fact, prices are expected to grow through 2023, according to several housing forecasts.

The market does seem to be cooling, however. With higher mortgage costs, U.S. home sales are down over 20% from a year ago. And last month, the median price for an existing home in the U.S. dropped from a record high of $413,800 to $403,800, according to the National Association of Realtors (NAR).

But considering that median home prices have soared by nearly 36% since the pandemic began, a one-month price reduction of around 2.4% can be seen as more of a market adjustment than a significant decline in value. 

Housing prices are still expected to be up 11% for 2022, followed by 2% in 2023, according to NAR's most recent forecast. This follows similar forecasts by Freddie Mac, Fannie Mae and Zillow, which predict positive — albeit slowing — price growth in 2022 and 2023.

And despite the decelerating price growth, median home prices are still up 10.8% from a year ago, according to NAR's data. For context, median home prices have risen by roughly 4.5% a year since 1992, according to Federal Housing Finance Agency data.

“This isn't a recession in home prices. A price decline on a nationwide basis is unlikely.” -Lawrence Yun

"This isn't a recession in home prices," says Lawrence Yun, NAR's chief economist. "A price decline on a nationwide basis is unlikely."

That's because demand for homes remains strong, primarily due to strong employment numbers and an "inadequate" supply of homes.

However, for some local markets that experienced extraordinary price growth in the last couple of years — like in California — a decline in price is possible, says Yun. But "those price drops will be very short in duration," because decreases will be viewed as "a second chance opportunity" by buyers who were previously priced out of the market.

This already seems to be happening in some real estate markets where prices surged during the pandemic. In July, San Jose home prices declined by 4.5%, Phoenix by 2.8%, San Francisco by 2.8% and Austin by 2.7%, according to the latest data provided by Zillow.

That said, "there's nothing to suggest prices will decline in more affordable markets," says Yun. Of course, forecasts don't account for unforeseen events, like geopolitical conflicts or worsening supply chain issues, he adds.

It's possible that home prices could decrease, but "with stabilizing mortgage rates, and some job creation, home prices should also stabilize," Yun says.

Keep reading on CNBC.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

Search Homes in Colorado

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Search Homes in Oregon