I’ve said it before and I’ll say it again- Denver is a hot real estate market! Not just in Colorado, but in real estate in general there are news stories every day: some about inventory, others about interest rates and still others bring concern to buyers if now is the right time to buy. Certainly, hot button topics like current market conditions, the economy, home prices and available inventory impact a buyer’s ability to navigate an uncertain market. It can be a lot to take in and the media likes to inflame these areas and create fear. Yet, sometimes, getting back to the basics of the benefits of homeownership is a game changer in deciding to buy. I want to help alleviate your fear and uncertainty if you’re dreaming of a new home. Here are 5 benefits to buying in any market, and yes, even in a volatile and uncertain one:
1. Building Equity and Wealth Creation
With every monthly mortgage payment, homeowners build equity. Over time, this equity can be accessed to act as a financial cushion in case of unexpected expenses, used to make home improvements, or capitalized on to purchase and leverage additional real estate. Equity is the most powerful wealth building vehicle, especially when looking to pass on a legacy to future generations. This is multiplied when buyers understand this and purchase at a younger age so that as the years go on, families can start building generational wealth.
2. Forced Savings
Owning a home is a way to force savings and create a sense of financial stability. Besides the benefits of principle reduction and the aforementioned creation of equity, a fixed, consistent mortgage payment each month can help buyers learn to budget and save money in the long term. This helps create a sense of responsibility. Unlike paying for a rental which not only goes up at each lease renewal and also creates a move-often lifestyle and unpredictable future budget impacts.
3. Tax Benefits
The tax benefits of homeownership, such as the mortgage interest deduction, lowers the overall tax bill and helps save money which can be huge tools in goals like debt payoff, wealth building and saving for a rainy day. A CPA can offer insights into the tax code for real estate, especially over time how real estate becomes a big tax advantage. Homeowners simply get more tax benefits than renters.
4. Long-Term Investment
Owning a home, or homes, is a long-term investment that appreciates over time. Even if the market is uncertain, over the long-term, the value of a home will very likely increase, providing a strong return on investment. Historically in the Denver Metro area, real estate has gone up in value year-over-year. Since 2002, 207% overall and just under 7% average annual appreciation. Plus, given our ongoing lack of existing and new inventory, strong birthrates in the early to mid-2000s and corresponding household formations, demand will continue to outpace supply keeping home prices strong. No matter if you have sticker shock from the initial price of your home, it eventually will bring you return and equity.
5. Sense of Community
Buying a home can be a way to put down roots and create a sense of stability in a homeowner’s personal lives and in the community. There is a sense of community and belonging that comes with homeownership and brings a sense of friendship, belonging and security. This benefit cannot be understated, especially in times of uncertainty. All walks of life can benefit from this from retirees, single people or families with young kids.
What questions do you have about home ownership? Are you in the market to buy or sell your home? Call and text me at (720) 323-4176 or email me at [email protected]
