Homeownership Has Its Benefits

Homeownership Has Its Benefits - Why do Californians want to own a home?  According to this California Association of Realtors June 2019 poll, these are some of the reasons, below:

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Questions regarding real estate?  Text/email me!

Francis

Home Valuation tool

Detailed, local trends etc...

Current mortgage rates   - low, with some volatility.

California: There's No Place Like Home

California - There's no place like home!

There has been much talk in the news about people leaving the Bay Area, and/or California for reasons of affordability and quality of life (commute, noise, lack of land etc...).
A California Association of Realtors Google Poll reports the following:

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Questions about real estate?  Text, or email me!

Francis

My Home Valuation tool
Detailed, local trends etc...
Current mortgage rates   (low!)

California: Millennials - Baby Boomers

The definition of a Millennial is not straightforward as evidenced by the many resources found online. However, if we follow the general guidelines of the Pew Research Center we can agree that these would be the people between the age of 19 and 35 as of 2016  (i.e. born between 1981 and 1997).
For the 3rd straight year nationwide, millennial homebuyers made up the largest part of all homebuyers: 35%, edging out Gen X (26%), boomers (31%) and the silent generation (9%).

Lots has been said and written about the level of indebtedness found associated with this slice of the American population (see for instance the article by Maya Pope-Chappell that I show on my previous post on my FB page:  "buried-in-debt millennials...").  Because they are the largest part of all homebuyers, we can only assume that more people nationwide would be engaged into the process of owning a home if the Millennials were not so saddled with student loans.  This could have in turn very positive repercussions on the US economy as a whole.

In California, these are some of the stats for Millennials and Baby Boomers (born between 1946 and 1964):

Click on the picture to see it larger.

Thank you for reading,
Francis

Silicon Valley Real Estate
Smart local Stats and Graphs 
non-profit organization worth noting: Partners for New Generations.

Student loans causing housing shift...

An analysis by the Federal Reserve Bank of New York found that for the first time in at least a decade, households with student-loan debt are less likely to have a mortgage than those without student-loan debt.

Additionally, a survey by the National Association of Realtors found that 49% of Americans reported that student loan debt is a "huge obstacle" to homeownership.

I had already blogged in July of last year about student loans and the general concerns this is causing for the housing market; the average pay-off time for a student loan is 21 years! 
This is also the subject of an article just published in the SJ Merc. on Sept. 23 2014, indicating: a "consultant's study says 8% fewer houses sold in the U.S." (as a result of student debt levels).
The Consultant is John burns Consulting, an Irvine-based firm that advises homebuilders. The article is from Tim Logan of the Los Angeles Times.

Thanks for reading!
Francis


Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
Our next E-Waste & Shredding event is on:
Sat. Oct 25, from 9am to 2pm (or until truck is full)

at: 161 S. San Antonio Rd
Los Altos, CA

Five advantages to owning a home...

To piggy-back on my last blog, I thought this blog post from Redfin  from April 21, 2014 was interesting.  It says it very well.

Five advantages to owning a home:

Your home is your castle, but there are also many financial advantages of owning a home. Here are five ways that owning can be better than renting.

1. As a Hedge Against Inflation
Your rent will go up on a regular basis, while your payment on a 30-year fixed mortgage will always remain the same.

Let’s say your monthly rent is $1,800. Assuming inflation (your rent increase) is 3 percent, in five years your monthly rent will be $2,026. By then, you will have paid about $115,000 of your landlord’s mortgage.

2. To Build Your Personal Wealth
Stop paying your landlord’s mortgage. When you own your home, your mortgage amount is going down and your property value is going up.

No other investment, asset or debt is as misunderstood as a home. A home can be a wonderful and lucrative investment, but like any investment, it needs to be regularly reviewed, maintained and, when appropriate, sold. Even if your home is paid off, you still pay costs for repairs and upkeep, taxes and insurance. But like any investment, if you own it long term, take care of it and sell when the market is right, you stand to make a great gain.

3. Tax Savings (Federal and State)
Under Section 163 of the IRS code, interest on loans used to acquire, construct or improve real estate is deductible on up to a $1,000,000 mortgage.

Interest on loans tied to real estate for any reason is deductible on up to a $100,000 mortgage. For example, interest on the first $100,000 of a home equity line of credit (HELOC) is tax deductible.

Let’s say you make $100,000 per year and rent a home for $1,800 per month. You would have to pay taxes on your entire income of $100,000 when you are renting that home. If you purchase a home with a monthly payment of $1,800, you only have to pay taxes on $78,400 of your annual income because the interest you paid on your mortgage can be used as a tax deduction.

4. Asset Diversification
Unlike with a 401(k) or IRA, when you invest in a home you can live in it while the investment grows.

Owning a home over an extended period of time is usually more lucrative than renting. With good planning and execution, you can learn to minimize the cost of homeownership and maximize the ability to create real wealth. Many small business owners have a home office and can use the home office as a tax deduction while they are earning income. Other homeowners will rent out a bedroom and use the rent to pay down their mortgage and gain equity faster.

5. Forced Savings
Monthly mortgage payments lower your mortgage, essentially creating a forced savings account.

In five years with a $1,800 monthly mortgage payment, you will have paid $29,331 of the principal on your mortgage. That would be money in your pocket if you choose to sell. For this example we use a $345,000 mortgage loan amount at a 4.75 percent interest rate, 4.881 percent APR and use a standard amortization table to come up with the principal pay down.

To: view the original article.  

Thank you for reading!  Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView