by Steve Harney on July 27, 2010 ·

Homeownership almost seems like a dirty word in today’s society. People are blogging, tweeting and facebooking their belief that buying a home is just plain stupid. I respect their opinion on the issue though I totally disagree. Why?

This might be the best time to buy a home in American real estate history.

Some might think I’m crazy. Cynics might think that I am saying this because I still hold a real estate license (though I have not listed nor sold a home in ten years). My reason for saying it is actually quite simple. Owning a home makes more sense than not owning a home for the vast majority of families in this country. Let me give you five reasons why.

1. Real Estate is a Great Long Term Investment

Don’t take my word on this. This is what Mike Mandel, former chief economist at BusinessWeek and current Senior Fellow at Wharton’s Mack Center for Technological Innovation, had to say:

We’ve just had the biggest boom and bust in real estate in recent history. Nevertheless, real estate has still greatly outperformed the stock market over the past ten years.

Below is his chart actually showing the difference between real estate and the stock market.

2. A Home Is a Better Place to Raise a Family

Don’t take my word on this. When Fannie Mae asked current renters for the major reason to buy a house in their National Housing Survey 2010, these were the answers renters gave (they could pick multiple answers):

• 78% said it was a good place to raise children
• 75% said because they would feel safe
• 70% said because you have control of your own space

3. A Home Creates a Sense of Community

Don’t take my word on this. The Federal Reserve Bank of New York just published a paper The Homeownership Gap. The paper explained:

Because owners have a financial interest in their property, they have incentives to take measures that will maintain or increase the value of that property. Some of these measures—such as fixing a leaky roof—are closely related to the house itself. Others, such as investing resources in the betterment of the neighborhood and the community, have broader beneficial effects on the local area, creating what economists call “positive externalities.”

4. It’s Cheaper to Own Than Rent in Many Parts of the Country

Don’t take my word on this. Housing Wire just reported on a Credit Suisse study:

While a segment of the renting population continues to rent, many are looking to dip their toes in the homeownership waters. Credit Suisse said the percentage of median household income needed to pay the mortgage on a median priced home is at a 30-year low… Low mortgage rates and property values makes homeownership more attractive than renting for many. In many markets — including Washington DC, California’s Inland Empire, Las Vegas and Phoenix — paying for a mortgage is less expensive than renting.

And here is a graph from the study:

5. The People Who Do Buy a Home Don’t Regret It

Don’t take my word on this. Probably the best people to ask if buying a home makes sense are the people who currently own homes. A recent national poll commissioned by Bankrate.com found:

Ninety percent of homeowners say they don’t regret buying their home despite a nationwide tsunami of foreclosures, short sales and loan modifications.

It’s a great long term investment. It’s a great place to raise a family. It gives you a greater sense of community. It’s less expensive than renting. People who currently own have no regrets. Buying a home seems like a no brainer to me.

Freddie Mac began tracking interest rates for the 30-year mortgage in 1971. The 15-year fixed-rate mortgage also hit a 19-year record low 4.03 percent average interest rate, down from 4.06 percent last week and 4.68 percent last year at this time. Interest rates also dropped for the five-year and one-year Treasury-indexed adjustable-rate mortgages, which averaged 3.79 percent and 3.7 percent, respectively this week.

“The decline in mortgages rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors,” said Frank Nothaft, vice president and chief economist at Freddie Mac, who cited reported drops in home builder confidence and consumer confidence in July as evidence of the trend. Still, he added, “we see these as part of the normal pattern of ebbs and flows in recovery and believe that there is sufficient momentum to carry the U.S. economy forward, albeit moderately.

The U.S. housing market continues to benefit from the tax credit: home prices and sales remain above year-ago levels. As the summer progresses, however, the positive impact of government stimulus will wind down. Experts point to improved stability as a sign the market can likely hold its ground without further support from the government. However, economists indicate that the key for the housing market through the end of 2010 will be job growth and a manageable level of distressed properties.
The economy continues its journey to recovery with two steps forward and one step back, but the ground lost during the recession was great and the progress so far should be celebrated. The road
to this particular recovery has been expected to be more prolonged than many previous recovery periods. Consumer confidence lowered from its high in May primarily due to a disappointing employment report, while the swelling federal deficit has also raised concern. Unmanageable debt levels have lead some European countries into their current situation, and Americans do not want
to follow suit.
A job bill that would have further extended unemployment benefits has not gotten off the ground due to concerns over the deficit. Sited as a top priority for the government, a financial overhaul bill continues to proceed though Congress. The bill’s goal is to protect the financial system and the average consumer from unnecessary risk and unsound lending practices in an effort to build a stronger system for the long-term stability of the U.S. economy.

By the Numbers…

Existing home sales slowed slightly in May to 5.66 million, down 2.2% from April but up 19.2% from last May. This is the eleventh consecutive month of year-over-year increase. Lawrence Yun, NAR chief economist, attributes this to the “ongoing effects of the home buyer tax credit,” and he anticipates the same next month. In May, 46% of sales were from first-time buyers, down slightly from the previous month’s 49% but
still considered high.

Inman News -Inman News is the leading source of independent real estate news, information, advice, research, opinion and commentary for industry professionals and consumers alike.

Realty Trac – Take your Real Estate investment to the next level. Become a member of RealtyTrac and get exclusive access to all the information and resources you need to buy, sell or research distressed real estate. Even if you are not interested in purchasing a foreclosure home, understanding the impact of foreclosures in the area is crucial to any real estate related decision.

HELPFUL TIPS

First Time Home Buyers Tax Credit – The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. It also authorized a tax credit of up to $6,500 for qualified repeat home buyers.

MSN Real Estate – Homes located within walking distance of amenities such as schools, parks and shopping aren’t only more convenient for their owners, often they’re also worth more than homes in neighborhoods where driving is the rule, according to a new study. The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of “walkability” were directly linked to higher home values. The report, “Walking the Walk: How Walkability Raises Housing Values in U.S. Cities,” was commissioned by CEO’s for cities a national network of urban leaders from the civic, business, academic and philanthropic sectors.

Cheryl Grant of Keller Williams Realty sponsored the C-SNIP Classic golf event and auction at Scott Creek Country Club May 22nd, 2010. C-Snip provides low-cost spay/neuter surgery for dogs and cats whose caretakers cannot pay the fee at full service vet clinics.

Cheryl, a caretaker for three of her own pets dogs Willa and Etta and rescue cat Sam, supports the C-SNIP efforts to reduce the number of unwanted pets. “Prevention of overpopulation is the key to the problem of unwanted pets. It’s a problem that plagues not only the Grand Rapids area, but the entire nation. I’m proud to be a small part of this great effort”.

More than 100 golfers participated in this years event and more than $25-thousand dollars was raised for C-SNIP. This was the most successful Classic in its 10-year history.  

C-Snip Board Member, Pam Olsen says , “Cheryl Grant Real Estate was the first major sponsor to come forward. Her respect for and confidence in the mission of C-SNIP is evidenced by her sponsorship commitment. She understands that prevention of overpopulation is the only humane solution for the very sad reality of too many pets for too few homes. It’s also the least expensive and easiest to administer.”

To learn more about C-SNIP visit its website at http://www.csnip.org/ To see photos of the event please visit Cheryl’s website and www.cherylgrant.com

Cheryl Grant's Golf Team (left to right) Cheryl Grant, Rikki Bouts, Linda Burpee, Judge Sara Smolenski

Cheryl Grant with C-Snip Mascot "Snippy"

Judge Sara Smolenski - Auctioneer for the C-Snip Fundraising Auction

Great news for the city of Grand Rapids. The rest of the world will soon learn what we’ve known for quite some time. Fortune Magazine, a nationally known publication, is calling Grand Rapids Michigan a Success . Fortune Magazine writer Alex Taylor III credits a “remarkable combination of business leadership, public-private cooperation and the deep pockets of Philanthropists” over the past two decades for making Grand Rapids a success. Read more on this good news for the area by clicking here.

More than 800 people gathered at The DeVos Place Convention Center to honor six outstanding local women and a remarkable student. Tribute is among the YWCA’s biggest fundraising events of the year.

To learn more about the YWCA, visit their website by clicking here.

Team Captain, Joe Brennan

Cheryl Grant-Sponsored Team with her logo prominently displayed on the racers' shirts

Two members of the Cheryl Grant - Sponsored Team

Members of the Cheryl Grant - Sponsored Team

Six local guys ran their hearts out at the Rhoades McKee Reeds Lake Triathalon Saturday. Led by team captain, Joe Brennan, the team raised awareness for the Help Fight Scleroderma Foundation. Joe’s mother, Mary Catherine Brennan, sadly lost her battle with Scleroderma in June of 2009. She struggled with the disease for 6 years. The foundation was created as a means to raise awareness of Scleroderma in West Michigan in the hopes of finding better treatments, more answers, and ultimately a cure for the disease. HFS also holds an annual 5K race to raise money for the foundation. This year’s event, The Greatest 5K Ever, is Saturday, October 3 at 10:00am at Riverside Park in Grand Rapids. Proceeds from the race goes  to research being done at the University of Michigan specifically for Scleroderma. Check out http://www.helpfightscleroderma.com to learn more about the event or email joseph@helpfightscleroderma.com for more information.

http://www.rhoadesmckee.com/community/reeds_lake_triathalon.html

http://www.CherylGrant.com

With the $8,000 tax credit scheduled to end Nov. 30, the number of home buyers looking to take advantage of the credit (as well as the historically low prices and low interest rates) could possibly increase as the year winds down, especially as we start seeing glimmers of an economic upturn for the real estate market. If you’ve been waiting for the right window of opportunity to put your home on the market, this might be the time. I’d be happy to answer any questions you might have. Feel free to call me or email me any time. For more information on the Tax Credit, visit http://www.federalhousingtaxcredit.com/2009/faq.php.

There is a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars.  The trick is to make one extra mortgage payment a year and apply that payment toward your loans principal.

This is the method being used by “Bi-Weekly Mortgage Reduction Services” and “Bi-Weekly Mortgage Saving Programs”.  Only, when you do it yourself, you don’t pay a third party unnecessary set-up costs and fees!

Example: $100,000 loan, 30-year mortgage, 6.5% fixed interest rate

One-time Payment

It may not be possible for you to increase your monthly mortgage payment. Keep in mind that most mortgages will permit you to make additional payments to your principal at anytime.  Perhaps, five-years after moving into your home you receive a larger than expected tax return, or an inheritance or a non-taxable cash gift.  You could apply this money toward your loans principal, resulting in significant savings and a shorter loan period.

Example:

With a $100,000, 30-year, 6.5% fixed interest rate mortgage loan, the borrower will pay a total of $227,542.98 to pay back the loan in 30 years.  That equals $127,542.98 in interest payments.

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months). That is a savings of $22,832.23 in interest.