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Five solid reasons to invest your money in real estate

On the fence about buying a home? Based on a Harvard white paper on housing studies, here are five solid reasons to invest your money in real estate:

5 reasons why real estate is a good investment

5 reasons why real estate is a good investment

1.  Homeownership is a form of savings.
Owning your own home is a means of saving. Due to the recent financial hardships of the last decade many of us have gotten out of the habit of building our savings. Buying a home with an amortizing loan is a form of forced savings. Although “forced savings” sounds negative, it’s actually a positive since you are saving money by building equity in a home. And while we aren’t seeing the double digit home price gains that occurred in 2012 and 2013, there was still single digit gains in home prices in 2014, and the prediction for 2015 is for those to edge up.
2. There are tax benefits to homeownership.
There are still substantial tax benefits to owning a home and/or selling and stepping into a larger home. Of course, there is the mortgage interest and property tax deductions that are ingrained into our financial psyche, but don’t forget about the capital gains when you go to sell. It’s almost tax time and if you sold a home last year, a single filer can exclude $250,000 in capital gains and it doubles to $500,000 for most married couples.
3. You “have to” pay for housing to live anyway.
Unless you are a millennial who has moved back home to live rent-free with parents or you are the parents and have moved in under the roof with a child and don’t have to contribute to a mortgage, you have to pay for housing. According to a recent Pew Research Center study, 36% of young adults ages 18-31 are now living with their parents but that still leaves 64% of young adults that have to pay for housing. Given the facts that rental rates are on the rise, down payments are as low as 3% for most first time home buyers–down from 10-20% from last year– and mortgage rates are at a 17 month low, it only makes sense to purchase if you have a job and good credit.
4. Homeownership is still a possible leveraged investment
Unless you know something we don’t, there aren’t many lenders out there willing to lend you money to buy stocks and bonds. But the good news is lenders are easing the mortgage requirements to qualify for a home mortgage, and homeownership is one investment that allows households to amplify appreciation of their home by a leverage factor.
5.  Homeownership is a hedge against inflation.
While we don’t have a crystal ball and can’t predict what is coming down the pike for 2015 and beyond, owning a home is likely a hedge against inflation. As long as housing costs are going up and rents are increasing (both conditions found in today’s market) and you are in a fixed-rate mortgage, the odds are in your favor that owning a home is a hedge against inflation.
Looking for Scottsdale homes for sale? Contact us at 480-405-4228 or fill out the contact form below to make an appointment to view properties.
Don Matheson
Realtor | Founder
The Matheson Team – RE/MAX Fine Properties
21000 N. Pima Rd., #100, Scottsdale, AZ 85255
[email protected]
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