Rising Home Prices: Blessing or Burden?
Download MP3Overview:
- The real estate market has experienced significant increases in home values. But what does this mean for homeowners and renters? How does this impact you if you already own a home or are looking to buy one?
- Key Points Discussed:
- Home Value Increase:
- The pandemic housing boom has increased home values by six trillion dollars over the last couple of years.
- The average American now has $185,000 in equity that can help build wealth.
- What Is Equity?
- Equity isn’t cash in your bank account but the value your home has gained over time.
- Renters don’t have that wealth and face higher barriers to buying a home.
- Tapping Into Equity:
- If you bought a house in 2014 for $325,000, it could now be worth $600,000 or more.
- Equity can be accessed through loans, but they come with costs like interest and higher property taxes.
- Home equity loans allow you to borrow against your home but remember that it's a loan, not free money.
- Impact on Taxes and Insurance:
- Higher home values lead to reassessments and increased property taxes and insurance premiums.
- Your monthly expenses could increase by $1,000 or more when considering tax, insurance, and equity loan costs.
- Renting vs. Buying:
- With rising home prices, is it still a good idea to buy a house?
- Although prices have gone up, the market is still driven by demand, not speculative investment.
- If you’re renting, rising rents can push you to buy a home now, even if prices are higher than before.
- Renters and Rent Increases:
- As landlords face increased property costs (taxes, insurance, maintenance), rents are going up.
- If you’re struggling with rent hikes and eviction threats, homeownership could provide more financial stability.
- Buying a Home with Little to No Money Down:
- There are affordable homes in most markets where your mortgage payment can be lower than your rent.
- The cost to rent an apartment might be comparable to the down payment required for a home.
- The Benefits of Homeownership:
- Even if it’s not your dream home, buying a property means building equity.
- Homeownership offers more control over your finances compared to renting, where you’re subject to rent hikes and uncertainty.
- Tips for Potential Homebuyers:
- Consider buying a smaller or older house with a mortgage that fits your budget rather than continuing to rent and face rising costs.
- There are ways to buy a home with less financial strain than you may think, even in the current market.
- Home Value Increase:
- Conclusion:
- The real estate market is complex, but there are opportunities for both homeowners and renters to benefit. It’s important to assess whether buying a home is right for you now, based on long-term financial goals.
Tune in to learn how you can navigate the housing market, whether you're a homeowner looking to leverage your equity or a renter considering the benefits of buying a home.
