Homeownership Charges Are Down. This May Be the Cause Why
It has long been said that home ownership can provide financial stability. If you own a home, you are guaranteed the same mortgage payment for the life of your home loan (assuming you have a fixed rate loan and not a variable rate mortgage). You also have the peace of mind that as long as you pay your mortgage and property taxes you cannot be forced out of your home – while your landlord could always decide to sell an apartment if you rent an apartment and don’t renew your lease .
Owning a home also means being in charge without having to follow the landlord’s rules. That alone is a good reason to own rather than rent.
Nevertheless, the proportion of home ownership has declined in recent months. In the second quarter of 2021, the percentage of Americans who owned a home was 65.4%, according to the Census Bureau. A year earlier, this percentage was 67.9%. And in the first quarter of 2005 the home ownership rate was 69.1%.
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Why is home ownership falling?
There are a few reasons that could explain why home ownership has fallen. First, the pandemic may have shifted the way home ownership data is collected and interpreted. Second, the pandemic may have caused many people to uproot their lives and change their circumstances.
But home values may also have played a role in this general decline in property ownership. Real estate values have skyrocketed in the wake of the pandemic. That means a couple of things.
First, it means that potential homeowners who wanted to buy in the past year may have been left out of the real estate market. It could also mean that existing homeowners struggling to keep up with their housing costs chose to sell their homes while their value was higher and rent them instead.
Should You Buy a Home Today?
Right now is a difficult time buying a home. Although mortgage rates are very attractive, there is really not much inventory on the market and the homes available are priced higher than usual. If you can find a home that is affordable for you, you may want to buy now to take advantage of current mortgage rates. But if you start looking for a place to live now, you could also spin your wheels once you realize the few options you have.
While the now may not be the best time to buy a home, there are generally advantages to owning a home. In addition to the perks mentioned above, homeowners are privy to certain tax breaks, such as the ability to deduct mortgage interest on a tax return. Tenants do not receive any tax relief on the rent they pay.
Additionally, buying a home gives you the opportunity to own an asset that can increase in value over time. Once that happens, you have options. You can sell your home for a profit if it makes sense to you, or you can borrow against the equity that you have in your home (that is the part of your home that you own entirely).
Many people’s lives have been changed by the pandemic, so it’s not shocking that home ownership rates have changed recently. Only time will tell whether these rates will rise again or fall further in the short term.