How do rising prices impact your home equity?

How do rising prices impact your home equity?

20160816-stm-shareRecently, we shared the results of the latest Home Price Expectation Survey by Pulsenomics. One of the big takeaways from the survey is that over the next five years, home prices will appreciate 3.5% per year on average, and cumulatively will grow by around 18%.

So what does this mean for homeowners and their equity position?

For example, let’s assume homeowners purchased and closed on a $150,000 home in January of this year. If we only look at the projected increase in the price of that home, how much equity would they earn over the next 5 years?

 

home-equity-increase-graphOver a five-year period, their equity will increase by over $28,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is homeownership something to be proud of, it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, let’s meet up to find out if you are able to today!

Important information about the STAR program

Important information about the STAR program

NEW OLEAR BANNERAre you up to date on the latest news about the New York State School Tax Relief (STAR) program? The Basic and Enhanced STAR benefits save most New York homeowners hundreds of dollars annually!

This year, the state announced that certain homeowners will now have to register for the new STAR credit. New applicants who qualify for STAR will receive a credit in the form of a check rather than a property tax exemption.

You should register for STAR if you:
• Bought your home after the 2015 STAR application deadline (www.tax.ny.gov/pit/property/star/2015-star-deadlines.htm)

• Never applied for the STAR benefit on your primary residence, or
• Received a letter advising you to register for Basic STAR.

Please note that you do not need to register for STAR if you are already receiving a STAR exemption and purchased your current home prior to May 1, 2014.

The deadline to register in order to receive your rebate check by September was July 1, but if you haven’t registered yet, you still can! You’ll simply receive your rebate check at a later date.

To register, please visit www.tax.ny.gov/star or call (518) 457­-2036 from 8:30 a.m. to 4:30 p.m. weekdays.

Harvard: Five reasons why owning a home makes sense financially

Harvard: Five reasons why owning a home makes sense financially

20160613-FinancialReasons-STMWe have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own a home differ for each buyer, but there are many basic similarities.

Eric Belsky is the Managing Director of the Joint Center of Housing Studies (JCHS) at Harvard University. He authored a paper on homeownership titled The Dream Lives On: The Future of Homeownership in America. In his paper, Belsky reveals five financial reasons why people should consider buying a home.

Here are the five reasons, each followed by an excerpt from the study: 

1) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2) You’re paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.” 

3) Owning is usually a form of “forced savings.”

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income. On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition. 

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, let’s get together and evaluate your ability to do so.

Americans believe real estate is the best long-term investment [INFOGRAPHIC]

Americans believe real estate is the best long-term investment [INFOGRAPHIC]

STM-ENG-1-1046x1464Some Highlights:

  • Real estate outranks stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans.
  • Real estate is ranked as the best long-term investment among all age groups.
  • Millennials rank both real estate and savings/CDs at 26% when it comes to the best long-term investment.

For more information on real estate as an investment, please contact The Olear Team today!

Don’t be fooled … homeownership is a great investment! [INFOGRAPHIC]

Don’t be fooled … homeownership is a great investment! [INFOGRAPHIC]

Dont-Be-Fooled-STM-1046x1395

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.”
  • Whether you rent or own, you are paying a mortgage. Yours when you own, your landlord’s when you rent.

    For more information, please contact The Olear Team today!

One more time, real estate is a great investment

One more time, real estate is a great investment

KCM1

In a recent blog post on Marginal Revolution, economist Alex Tabarrok discussed homeownership as an investment.

Here is what Mr. Tabarrok had to say:

“Housing is overrated as a financial investment. First, it’s not good to have a significant share of your wealth locked into a single asset. Diversification is better and it’s easier to diversify with stocks. Second, unless you are renting the basement, houses don’t pay dividends. Stocks do. You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market. You didn’t expect to get a great investment and a place to live in the meantime, did you?” 

Here is a rebuttal:

We have reported many times that the American Dream of homeownership is alive and well.

Eric Belsky, the managing director of the Joint Center of Housing Studies at Harvard University expanded on the top financial benefits of homeownership in his paper –The Dream Lives On: the Future of Homeownership in America.

Let’s use some quotes from Belsky’s study to address comments by Mr. Tabarrok:

Tabarrok:  

“Housing is overrated as a financial investment.”

Belsky:

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

Tabarrok:

You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market.”

Belsky:

“Homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

Tabarrok:

“You didn’t expect to get a great investment and a place to live in the meantime, did you?”

Belsky:

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.

Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, contact a local professional who can help evaluate your ability to do so. For more information, please contact The Olear Team today!