Homeowner’s Net Worth is 45x Greater Than a Renter’s!

A Homeowner’s Net Worth is 45x Greater Than a Renter’s! | MyKCM

Every three years, the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).In a Forbes article, the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

A Homeowner’s Net Worth is 45x Greater Than a Renter’s! | MyKCM

Put Your Housing Cost to Work for You

Simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together to discuss your next steps.

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Questions? Every Home Buyer Should Ask.

3 Questions Every Buyer Should Ask Themselves | MyKCM

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Answering the following 3 questions will help you determine if now is actually a good time for you to buy in today’s market.

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a recent survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the four major reasons why people buy a home have nothing to do with money. They are:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not. 

2. Where are home values headed?

According to the latest Home Price Index from CoreLogic, home values are projected to increase by 5.3% over the next 12 months. 

What does that mean to you?

Simply put, if you are planning on buying a home that costs $250,000 today, that same home will cost you an additional $13,250 if you wait till next year. Your down payment will need to be higher as well to account for the higher home price.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates. 

The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected that mortgage interest rates will increase over the next twelve months as you can see in the chart below:

3 Questions Every Buyer Should Ask Themselves | MyKCM

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

2016 The Best Year in Real Estate in a Decade

Great-Year-For-RE-KCM

In today’s market we are seeing a healthy supply of buyers entering the market and bidding on the limited inventory available which is helping to drive new construction and support the increase in home prices.

A few weeks ago, Jonathan Smoke, the Chief Economist at realtor.com, exclaimed: “All indicators point to this spring being the busiest since 2006.” Now, Freddie Mac has doubled down on that claim and is saying that 2016 will be the best year that the real estate industry has seen in a decade. In their March Housing Outlook Report, Freddie Mac explained:

“Despite the challenges facing the housing market, we expect this to be the best year for housing in a decade. Home sales, housing starts, and house prices will reach their highest level since 2006 according to our latest forecast…Challenges remain, with low housing supply and declining affordability being a key concern in many markets, but on balance, the housing markets in the U.S. are poised for the best year since 2006.”

The key indicators that have given Freddie Mac such a positive outlook are:

  • Low interest rates
  • A resilient labor market
  • An increase in household formations
  • A projected increase in newly constructed homes

Bottom Line

2016 looks to be shaping up as a great year for residential real estate. Whether you are thinking of buying or selling, now may be the time to sit down with a real estate professional to discuss the new opportunities that are arising.

Homeownership is a Great Investment

Dont-Be-Fooled

Some Highlights:

  • Harvard University’s Joint Center of Housing Studies recently released the top financial & emotional reasons to own a home.
  • Owning is a good way to build up wealth that can be passed along to your family as it is usually a form of “forced savings.”
  • You’re paying for a house whether you own or rent, but owning gives you control over your living space.