Homeownership is Full of Financial Benefits

13448 Foin-Follette #GM301, Black Butte Ranch, OR 97759
Presented by The Arends Realty Group | Offered at $1,750,000 | MLS# 220112898

From Keeping Current Matters

A Fannie Mae survey recently revealed some of the most highly-rated benefits of homeownership, which continue to be key drivers in today’s power-packed housing market. Here are the top four financial benefits of owning a home according to consumer respondents:

  • 88% – a better chance of saving for retirement
  • 87% – the best investment plan
  • 85% – the chance to be better off financially
  • 85% – the chance to build up wealth

Additional financial advantages of homeownership included in the survey are having the best overall tax situation and being able to live within your budget.

Does homeownership actually give you a better chance to build wealth?

No one can question a person’s unique feelings about the importance of homeownership. However, it’s fair to ask if the numbers justify homeownership as a financial asset.

Last fall, the Federal Reserve released the Survey of Consumer Finances, a report done every three years, with the latest edition covering through 2019. Their findings confirmed that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters ($255,000 for homeowners compared to $6,300 for renters).

The difference in net worth between homeowners and renters has continued to grow. Here’s a graph showing the results of the last four Fed surveys:

The above graph only includes data through 2019, but according to CoreLogic, the equity held by homeowners grew by $26,300 over the last twelve months alone. That means the gap between the net worth of homeowners and renters has probably widened even further over the last year.

Some might argue the difference in net worth may be due to homeowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows homeowners have greater net worth than renters regardless of their income level. Here are the findings:

Others may think homeowners are older and that’s why they have a greater net worth. However, a Joint Center for Housing Studies of Harvard University report on homeowners and renters over the age of 65 reveals: “The ability to build equity puts homeowners far ahead of renters in terms of household wealth…the median owner age 65 and over had home equity of $143,500 and net wealth of $319,200. By comparison, the net wealth of the same-age renter was just $6,700.”

Homeowners 65 and older have 47.6 times greater net worth than renters.

Full article on Keeping Current Matters


Spring Buyers Have 50% Fewer Homes to Choose From

65904 Fazio Lane, Bend, OR 97701
Presented by Lisa Altick | Offered at $1,595,000 | MLS# 220113081

From REALTOR® Magazine

If your buyer is struggling to find a home for sale, they’re not alone. For every 10 homes for sale last year, there are fewer than five today. Home shoppers this spring have 52% fewer homes to choose from than last year, and they’re facing record-breaking prices, according to realtor.com®’s latest Monthly Housing Trends Report.

The national median list price in March increased to $370,000, a 15.6% jump compared to a year ago and an all-time high, realtor.com® reports.

Because of the high demand and low inventory, “home prices have skyrocketed, shattering previous records,” said Danielle Hale, realtor.com®’s chief economist. “We expect to see more sellers emerge in the weeks ahead, which should give buyers more options. Homes will likely continue to sell fast, but increasing interest rates and monthly costs could slow the pace of price gains unless we see a boost in demand from equity-rich repeat buyers.”

Listing prices increased the most in March in Austin, Texas, up 39.8% annually; Buffalo, N.Y., up 28.3%; and Los Angeles, up 24.8%.

Home buyers appear to be in a hurry. They are trying to buy before any further increases in home prices and mortgage rates, which have moved above their sub-3% averages over recent weeks.

But finding a home hasn’t been easy. ”In many areas of the country, there are half as many available homes for sale than a year ago—and in some markets that number increases to less than one-third,” Hale says.

The National Association of REALTORS® released its Pending Home Sales Index on Wednesday, which showed contract signings fell 10.6% in February, due to inventory shortages rather than a lack of buyer demand.

Full article on REALTOR® Magazine


Average Home Sale Price Hits All-Time Record

1745 NW 38th Ave, Camas, WA 98607
Presented by Connor Zuvich | Offered at $1,125,000 | MLS# 21257898

From housingwire.com

The median home sale price increased 16% year-over-year to $331,590 – an all-time high, per a report this week from Redfin. But that’s not stopping buyers from snatching up homes days after they’re listed.

During a four-week period ending March 21 and covering 400 metros, 58% of homes that went under contract had an accepted offer within the first two weeks on the market. And between March 14 and March 21, 61% of homes sold in that timeframe had been on the market two weeks or less, and 48% had sold in one week or less.

And offers are coming in well-above asking price, too. Nearly 40% of homes sold above their list price – another all-time high – and 15 percentage points higher year-over-year. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased to 100.2%.

This is concerning for experts, though, many of whom believe home prices will remain high even after mortgage rates, inventory, and building material costs recover to pre-pandemic levels. Rates are already above 3% – after falling into the 2% range during the majority of 2020 – but construction companies are still struggling to keep up with insane lumber prices, stifling new builds.

National Association of Home Builders Chairman Chuck Fowke recently noted that supply shortages and high demand have caused lumber prices to jump “about 200%” since April 2020, and the elevated price of lumber is adding approximately $24,000 to the price of a new home.

“When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans,” said Daryl Fairweather, Redfin chief economist. “That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society.”

Fairweather noted that President Joseph Biden’s hopeful $3 trillion infrastructure plan includes building 1.5 million sustainable homes, but there is no guarantee the bill will be “passed with every policy proposal intact.”

“America needs an audacious goal to increase the housing supply, given the U.S. is short 2.5 million homes,” she said. “It may be expensive to build millions of homes, but ignoring the problem would only cause housing to become more unaffordable and worsen housing insecurity.”

The best chance at home prices lowering is the continued rollout of the COVID-19 vaccine, experts said, which will allow lumber mills to reopen and material prices to lower. Builders will then be spending less on new builds, which will help the backlogging of inventory.

Full article on housingwire.com


Baby Boomers Are the Richest Home Sellers

19305 Hill Top Rd, Lake Oswego, OR 97034
Presented by The McCartan Group | Offered at $1,375,000 | MLS# 20599321

From REALTOR® Magazine

Baby boomers tended to make up the majority of sellers last year—at 43%—and they also saw the highest profits, too.

Overall, home sellers of all age groups who sold their homes last year saw a median gain of $66,000 more than what they originally purchased for—a $6,000 increase compared to the previous year. But for sellers ages 66 to 74, they saw a median gain of $100,000 in equity, according to the National Association of REALTORS®’ “2021 Home Buyer and Seller Generational Trends” report.

“In a real estate market that is tipped in favor of sellers, boomers and older homeowners are really the ones holding the cards,” says Danielle Hale, realtor.com®’s chief economist.

As the housing market surges, homeowners who’ve been in their homes the longest tend to see the highest profits at resale. Younger baby boomers (those between the ages of 56 to 65) tended to live in their homes a median of 14 years whereas older segment of baby boomers (those between the ages of 66 to 74) had lived in their homes a median of 16 years, according to NAR’s report. The median tenure in a home for the overall population is 10 years.

The primary reason baby boomers cited for selling their home: To purchase a similarly sized home closer to family members and friends. The second most popular reason to sell was to downsize.

The following is a chart broken down by age group of the median equity earned on a home recently sold, according to NAR’s report.

Full article on REALTOR® Magazine


U.S. Property Prices Have Soared Since Covid-19 Struck One Year Ago

3761 NW Devoto Ln, Portland, OR 97229
Presented by Debra Sabatino | Offered at $1,850,000 | MLS# 20270152

From Mansion Global

The housing market bounced back quicker than other parts of the economy, according to realtor.com

Median home prices in the U.S. have risen 14.3% since the World Health Organization declared Covid-19 a pandemic a year ago, according to a report Thursday from realtor.com.

The push for more space and a desire for affordable homes has led to a quick recovery for the country’s property market, according to realtor.com’s chief economist Danielle Hale.

“The housing market bounced back so much faster than other sectors of the economy that many have forgotten that housing activity slowed to a crawl during the early days of the pandemic,” she said in a statement. “One year later, the demand for housing remains strong, while supply remains limited.”

Indeed, as of the week ending March 7, new listings had fallen 27% compared to the same time last year, the data showed. Total inventory dropped 51% in the same time period, and there are nearly 500,000 fewer homes on the market than there were in March 2020.

Across the U.S., 32 of its 50 markets have surpassed realtor.com’s recovery benchmark in the week ending March 6. The greatest recovery has been registered in the cities of Austin, Denver, Riverside, Portland and Phoenix.

Limited supply, low mortgage rates and the continued demand to get out of cities has also meant homes are selling an average of six days faster than they did last year, the report found.

“In an environment where the number of homes listed for sale is limited and affordability is becoming more of a concern for many, the competition to find the home of your dreams is greater than ever,” said realtor.com CEO David Doctorow in a statement.

However, that could change soon.

“The housing market’s lopsided momentum could ease in the coming months,” Ms. Hale predicted in the report. “We expect the vaccine’s rollout to alleviate some sellers’ anxieties, which could help the supply crunch. At the same time, although interest rates remain low, they’ve begun to increase, which could test buyer demand in the coming months.”

The report did not break down the market by price point.

Full article on Mansion Global


Millennials Are Driving US Home Sales

628 NW Portland Avenue, Bend, OR 97701
Presented by Chris Scott | Offered at $1,249,000 | MLS# 220113262

From housingwire.com

Experts see even better days ahead as inventory returns in spring

For the second consecutive month, existing home sales rose, as January’s numbers were up 0.6% from December.

According to Lawrence Yun, chief economist for the National Association of Realtors, home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming in the market.

To him, sales easily could have been 20% higher if there had been more inventory and more choices.

Low inventory remains an enormous problem for the industry, especially with mortgage rates hanging below 3%. But experts agree better days are ahead, with more homeowners expected to move during the warmer months.

Yun also said the continued COVID-19 vaccine rollout and financial stimulus from President Joseph Biden’s American Rescue Plan will only aid in more home sales – which will in turn prop up the economy even more.

Younger-aged homebuyers are expected to continue to pack the market this year, especially with the possible passage of Biden’s $15,000 tax credit for first-time homebuyers.

First-time homebuyers were responsible for 33% of home sales in January, up from 31% in December 2020 and from 32% in January 2020.

Full article on housingwire.com


Why Owning a Home Is a Powerful Financial Decision

56634 Little River Court, Bend, OR 97707
Presented by Tuttle & Tuttle Group | Offered at $2,095,000 | MLS# 220108042

From Keeping Current Matters

In today’s housing market, there are clear financial benefits to owning a home: increasing equity, the chance to build your net worth, and appreciating home values, just to name a few. If you’re a renter, it’s never too early to think about how homeownership can propel you toward a stronger future. Here’s a dive into three often-overlooked financial benefits of homeownership and how preparing for them now can steer you in the direction of greater financial security and savings

1. You Won’t Always Have a Monthly Housing Payment

Personal finance advisor Dave Ramsey explains, “Every payment brings you closer to owning the house. When you pay your rent, that money is spent. Gone. Bye. Not returning. But when you pay your mortgage, you work toward full ownership.”

As a homeowner, you can eventually eliminate the monthly payment you make on your house. That’s a huge win and a big factor in how homeownership can drive stability and savings in your life. As soon as you buy a home, your monthly housing costs begin to work for you as forced savings in the form of equity. When you build equity and grow your net worth, you can continue to reinvest those savings into your future, maybe even by buying that next dream home. The possibilities are truly endless.

2. Homeownership Is a Tax Break

One thing people who have never owned a home don’t always think about are the tax advantages of homeownership. The same article states, “You have tax advantages. Many of the costs of owning a home—like property taxes—are tax deductible. And if you’re paying off a mortgage, you’ll get to count your mortgage interest as a deduction when you file your tax return.”

Whether you’re living in your first home or your fifth, it’s a huge financial advantage to have some tax relief tied to the interest you pay each year. It’s one thing you definitely don’t get when you’re renting. Be sure to work with a tax professional to get the best possible benefits on your annual return.

3. Monthly Housing Costs Are Predictable

A third benefit is the fact that monthly costs start to become more predictable with homeownership, something that doesn’t happen if you’re renting. Ramsey also notes, “Rent rates will go up. Even if you found a killer deal in a hot area, inflation, competition, and rising property values will cause your rent to go up year after year.”

With a mortgage, you can keep your monthly housing costs relatively steady and predictable. Your monthly costs are most likely based on a fixed-rate mortgage, which allows you to budget your finances over a longer period of time. Rental prices have been skyrocketing since 2012, and with today’s low mortgage rates, it’s a great time to get more for your money when purchasing a home. If you want to lock-in your monthly payment at a low rate and have a solid understanding of what you’re going to spend in your mortgage payment each month, buying a home may be your best bet.

Full article on Keeping Current Matters


U.S. Home Buyers Drove Contract Signings to December Record

4632 SW 18th Pl, Portland, OR 97239
Presented by Dori Olmsted | Offered at $1,069,000 | MLS# 20230131

From Mansion Global

Activity remained unseasonably high, though listing shortages threaten to take steam out of the housing market

The U.S. market continued an unseasonal rally in December, with pending sales hitting an all-time high for the month, according to an index released Friday.

Home buyers signed 21% more contracts in December than a year prior, as surging demand for homes kept dealmaking at unusually high levels given the time of year, according to the National Association of Realtors (NAR) Pending Home Sales Index.

Frenzied housing activity continued to show slight signs of deceleration, though it’s likely due to a severe lack of homes on the market, according to Lawrence Yun, chief economist at the NAR.

Signed contracts decreased by an ever-so-slight 0.3% in December compared to November, the fourth time in a row that dealmaking fell on a month-to-month basis. Pending sales peaked in August, though housing activity has remained at historically high levels since.

“Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” Mr. Yun said in a news release on Friday. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”

Regionally, the South had the strongest December, with contracts up 27% over December 2019. The Northeast was next, with dealmaking up 22% year-over-year, followed by the West, up 19% annually, and the Midwest, up 14%, according to NAR’s figures.

On a local level, Portland, Oregon; Las Vegas; Denver; Los Angeles and Boston have recorded the most significant recovery in their markets since the lockdowns of last spring, according to a separate index from realtor.com.

Home prices in these and many other cities have soared as a result of competition over too few homes in the wake of the pandemic, which has spurred many to seek out new living arrangements while working and schooling from home. Inventory shortages could improve this spring, however, as sellers list their homes during the peak buying season, economists have speculated.

Full article on Mansion Global


2020’s Existing-home Sales Attain 14-Year Peak

65823 Bearing Drive, Bend, OR 97701
Presented by Pam Mayo-Phillips and Brook Havens | Offered at $2,995,000 | MLS# 220105134

From Realtor Magazine

According to the National Association of Realtors® report last Friday, existing-home sales in 2020 surged to the highest level in 14 years, landing 22% higher than a year ago. Existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—posted big gains year over year and rose by 0.7% in December 2020 compared to November 2020’s already unseasonably high rates.

NAR’s Chief Economist, Lawrence Yun, said “This momentum is likely to carry into the new year, with more buyers expected to enter the market. Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3%. Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway.”

Existing-home sales in December 2020 reached a seasonally adjusted annual rate of 6.76 million. Still, home buyers are finding a limited number of homes for sale. Inventory levels are at record lows. That has placed continued pressure on home prices, which continue to post double-digit yearly gains.

The median existing-home price for all housing types in December 2020 was $309,800, up nearly 13% compared to December 2019, NAR reports. Every major region of the U.S. saw home prices rise last month.

Full article on Realtor Magazine


Overall Home Sales Rise Nearly 26% From 2019

485 NW Spring St, White Salmon, WA 98672
Presented by England Property Group | Offered at $1,495,000 | MLS# 20673312

From Realtor Magazine

The National Association of REALTORS® reported last Tuesday that existing-home sales in November climbed 25.8% compared to last year.

Existing-home sales include completed transactions on single-family homes, townhomes, condos, and co-ops, slightly decreased by 2.5% in November compared to October’s unseasonably high levels. The slight decrease last month ended a five-month streak of month-over-month gains. Still, all four major regions across the country posted significant year-over-year growth.

Buying frenzy continued to press on housing markets in November. NAR reported that home prices are rapidly climbing up due to the high demand, posting double-digit increases compared to a year ago.

NAR’s Chief Economist Lawrence Yun said that circumstances are far from being back to the pre-pandemic normal. However, the latest stimulus package and with the vaccine distribution underway, and a very strong demand for homeownership still prevalent, robust growth is forthcoming for 2021.

Full article on Realtor Magazine