By Robert Freedman, senior editor, REALTOR® Magazine
A piece in the Wall Street Journal yesterday took issue with a recent Time cover story calling into question some of our most cherished beliefs about homeownership. Much of what the Journal talks about isn’t new. In fact, it recites benefits of homeownership that you already know better than anyone. But in pulling them together in the way it does, it makes you realize just how compelling homeownership is from just about every standpoint. If you haven’t seen the piece, by Brett Arends, here’s a thumbnail sketch of its 10 points:
Why is now a great time to buy?
1. You can get a good deal. Prices are down 30 percent on average. They’re at a level that makes sense for people’s income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It’ll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it’s simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It’s risk capital. If the economy picks up, you stand to benefit from that, even if you’re goal is just to have a nice place to live.
8. It’s forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year’s supply. Now’s the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.
[Editor's note: To learn about the issues being raised in the media about homeownership, buying today and what the facts are, REALTOR® Magazine is hosting a webinar Tuesday, Sept. 28, at 3 p.m. Eastern Time, with NAR Chief Economist Lawrence Yun and housing policy analyst Howard Glaser of the Glaser Group. Registration link.]
By Brian Summerfield, Online Editor, REALTOR® Magazine
Is the traditional model of homeownership in need of an overhaul? Is it even worth defending? Five years ago, these questions might have seemed absurd, but today, several commentators are posing them — and often coming down in favor of extensive and expansive changes to the system.
For instance, the latest issue of Time magazine has a cover story controversially titled, “The Case Against Homeownership.” (An abbreviated version of the article is available online.) Author Barbara Kiviat begins the piece with the statement, “Homeownership has let us down,” and subsequently describes what she considers to be the “dark side” of this institution.
I’ve seen similar arguments come out in recent weeks, but I’ll pick on Kiviat’s because it’s timely, it’s high-profile, and it condenses most of the criticisms that opponents of the status quo of homeownership have made recently into a single body of work. Here are the broad strokes of her case: Continue reading »