Owning Your Home Helps You Build Wealth

 You may have heard some people say it’s better to rent than buy a home right now. But, even today, there are lots of good reasons to become a homeowner. One of them is that owning a home is typically viewed as a good long-term investment that helps your net worth grow over time.

Homeownership Builds Wealth Regardless of Income Level

You may be surprised to learn homeowners across various income levels have a much higher net worth than renters who make the same amount. Data from First American helps illustrate this point (see graph below):

What makes wealth so much higher for homeowners? A recent article from Realtor.com says:

“Homeownership has long been tied to building wealth—and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”

Basically, the wealth you accumulate when you own a home has a lot to do with equity. As a homeowner, equity is built up as you pay down your loan and as home prices appreciate over time. Mark Fleming, Chief Economist at First American, explains how this same benefit isn’t true for renters in a recent podcast:

“Renters as non-homeowners gain no wealth benefit as home prices rise. That wealth actually accrues to the landlord.”

Before you decide to sign another rental agreement, now is a good time to think about whether it would be better for you to buy a home instead. The best way to figure out what makes sense for you is to have a conversation with a real estate expert you trust. That professional can talk you through the benefits that come with owning to determine if that’s the right next step for you. 

Bottom Line

If you're not sure whether to keep renting or to buy a home, know that owning a home, no matter how much money you make, can help build your wealth. Connect with a local real estate agent to get started on the path to homeownership.

Is now the right time to buy?

If you’re thinking of buying a home, chances are you’re paying attention to just about everything you hear about the housing market. And you’re getting your information from a variety of channels: the news, social media, your real estate agent, conversations with friends and loved ones, overhearing someone chatting at the local supermarket, the list goes on and on. Most likely, home prices and mortgage rates are coming up a lot. 

To help cut through the noise and give you the information you need most, take a look at what the data says. Here are the top two questions you need to ask yourself about home prices and mortgage rates as you make your decision: 

1. Where Do I Think Home Prices Are Heading?

One reliable place you can turn to for that information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. 

According to the latest release, the experts surveyed are projecting slight depreciation this year (see the red in the graph below). But here’s the context you need most. The worst home price declines are already behind us, and prices are actually appreciating again in many markets. Not to mention, the small 0.37% depreciation HPES is showing for 2023 is far from the crash some people originally said would happen.

Now, let’s look to the future. The green in the graph below shows prices have turned a corner and are expected to appreciate in 2024 and beyond. After this year, the HPES is forecasting home price appreciation returning to more normal levels for the next several years.

So, why does this matter to you? It means your home will likely grow in value and you should gain home equity in the years ahead, but only if you buy now. If you wait, based on these forecasts, the home will only cost you more later on.  

2. Where Do I Think Mortgage Rates Are Heading?

Over the past year, mortgage rates have risen in response to economic uncertainty, inflation, and more. We know based on the latest reports that inflation, while still high, has moderated from its peak. This is an encouraging sign for the market and for mortgage rates. Here’s why.

When inflation cools, mortgage rates generally fall in response. This may be why some expertsare saying mortgage rates will pull back slightly over the next few quarters and settle somewhere around roughly 5.5 and 6% on average.

But, not even the experts can say with absolute certainty where mortgage rates will be next year, or even next month. That’s because there are so many factors that can impact what happens. So, to give you a lens into the various possible outcomes, here’s what you should consider:

• If you buy now and mortgage rates don’t change: You made a good move since home prices are projected to grow with time, so at least you beat rising prices.
• If you buy now and mortgage rates fall (as projected): You probably still made a good decision because you got the house before home prices appreciated more. And, you can always refinance your home later on if rates are lower.
• If you buy now and mortgage rates rise: If this happens, you made a great decision because you bought before both the price of the home and the mortgage rate went up.

Bottom Line

If you’re thinking about buying a home, you need to know what’s expected with home prices and mortgage rates. While no one can say for certain where they’ll go, expert projections can give you powerful information to keep you informed. Lean on a trusted real estate professional who can add in an expert opinion on your local market.

Where Do I Invest After I’ve Maxed Out My 401(k)?

 

1. Invest in a traditional or Roth IRA.

2. Open a brokerage account.

3. Buy real estate.

4. Take advantage of your HSA.

For all the details: read the article here. 

Work With an Investment Pro

Filter Out the Noise (3 Min Read)

From Jay Papasan

 July 07, 2023

“In rowing as in life, there are competitors and there are racers. The competitor works hard and rows to his limit. The racer does not think of limits, only the race.”

– Jim Dietz

Filter Out the Noise

Olympic rowing is Great Britain’s most successful event. From 1900, when the sport debuted, to 2020, the Brits have medalled 70 times, including 31 gold medals. But coming into the 2000 Sydney Olympics, one boat was in a slump – the men’s eight. The crew hadn’t won gold since repeating as champions in 1908 (London) and 1912 (Stockholm.) They hadn’t made the podium since taking silver in 1980 (Moscow). No one expected them to medal, much less earn gold.

“We realized that if we continued to do what we’d done for the previous however many years,” stated British rower Ben Hunt-Davis, “we’d continue to get the same results.”

They chose to pivot and take a new approach. They started asking a simple question around everything they did in the two years they trained for the Olympics: “Will it make the boat go faster?”

Should we go to the pub after practice? Should I stay up late? Should we do another round of 500 meters on the rowing machines? Should I read this book or watch this show? All these questions found their answer in another question: “Will it make the boat go faster?” Often the answer was obvious.

The 2000 men's rowing crew would win gold in the Sydney Olympics despite years of disappointing results. They won gold using a simple question to filter out the noise. Anything that didn’t make the boat go faster was cast aside. Anything that made the boat go faster became their focus.

My son Gus rowed in high school and competed in men’s eights. For the crew of an eight to compete, they must operate in perfect harmony. The coxswain steers, cheers, and coaches from a seat in the stern. The second oar, the “stroke,” sets the tempo. All eight oars must leave and enter the water in unison. Shoulders and legs synchronized to pull evenly. All this over a 2,000-meter course. None of this is possible without endless hours of grueling training. And every rower must match the commitment of others for the boat to achieve “swing” in a race. Swing happens when everyone is rowing in such perfect harmony that not a single stroke is out of sync. It’s rare. It’s how gold medals are won. In the case of the 2000 British team, they achieved swing through two years of asking and answering “Will this make the boat go faster?”

A great question can serve as a compass for how you invest your time. Will this get me closer to my goal? Does this align with my values? Will this make me stronger? These “compass questions” work for individuals, teams, and companies with a clear, singular priority. When we lack clarity or a true north priority, we can justify any course of action. Robert Brault put it well when he wrote, “We are kept from our goal not by obstacles but by a clear path to a lesser goal.”

The first step is always clarity. What’s your ONE Thing? The next is to craft a compass question to filter out the noise and stay focused on what matters.

One question to ponder in your thinking time: How can I build the habit of asking my compass question to stay on track?

Make an Impact!
Jay Papasan

Essential Questions To Ask At A Home Inspection

 A home inspection is a crucial step in the home-buying process.

It helps you understand the condition of the property and identify any potential issues. But don’t just passively observe the inspection; actively participate by asking the right questions.

In this article, we’ll guide you through the entire inspection journey, from before the inspection to after it concludes. We’ve compiled a list of 16 essential questions to ask your home inspector at different stages, ensuring you gain valuable insights and make informed decisions.

What areas are not included in a standard inspection?

It’s important to know the limitations of a standard inspection to avoid any surprises later on. Some inspectors may not cover certain areas like swimming pools, septic systems, or detached structures.

How long have you been in the business?

Experience matters. Inquire about the inspector’s background to gauge their expertise and familiarity with local building codes and regulations.

Can I see a sample inspection report?

Reviewing a sample report provides insight into the level of detail and clarity you can expect from the inspector’s final report. It helps you assess their communication style and the comprehensiveness of their findings.

Questions to Ask During The Inspection

What does that particular finding or issue mean?

The home inspector may come across various issues or findings during the inspection. Ask for explanations to ensure you fully understand the significance of each one.

How can I effectively maintain specific systems or components in the house?

Proper maintenance is key to preserving the condition and longevity of your home. Ask for tips and recommendations on maintaining specific systems like HVAC, plumbing, or electrical.

What are your biggest concerns about the property?

The inspector’s professional opinion can provide valuable insights into the overall condition and potential future issues of the property.

By actively engaging with your home inspector during the inspection, you’ll gain a deeper understanding of the property’s condition and be better equipped to make informed decisions about your potential purchase.

Are there any significant issues with this house that concern you, and approximately how much would it cost to address them?

This question helps you gauge the severity of any identified issues and estimate the potential costs involved in addressing them. It allows you to evaluate whether the property is worth the investment.

Are there any specific actions or maintenance tasks I should be aware of once I move into the house?

Understanding the ongoing maintenance requirements of the property helps you plan for the future and ensure its continued upkeep.