Well, they are buying homes, but, you would think with the interest rates being at an all-time historical low that they would be pouncing on a market in Orange County where prices have been coming down for 5 years and now is, in some cases, HALF as expensive as it was in 2005.
WHAT is going ON??? Why aren't home buyers pulling the trigger like they should be?
Interestingly, the Baby Boom generation grew up buying homes as investments. Many Baby Boomers today have at least two homes because that generation acknowledged the potential of real estate. Generation Y today in its late 20s to mid 30s has a little different mindset. Some get it - and own two or homes already. Others weren't taught or didn't learn from their parents the value of real estate or the cyclical nature of the housing market. I have met an enormous number of people who are renting in their FORTIES! And not because they lost their home (although that is very common today). They are CHOOSING to rent, to wait out the slide and try to time the bottom perfectly.
What does someone lose when they wait? Write offs on their income is NUMERO UNO. Maybe it's a good idea to do the math...I write off approximately $25,000 in mortgage payments alone. How much does that save me in taxes? I'm not a CPA, so don't ask me, but it's a LOT.
Home Ownership can be a hedge against inflation. When our government is in deep water, the Feds like to print more money, which devalues our dollar and causes inflationary pressure. A house is a tangible asset, like gold, that isn't going anywhere. Historically, homes will always appreciate in value EVEN WHEN there are long periods of loss.
As long as you live in the home one year, any profit on your home slae is looked at by the government as a capital asset and capital assets receive preferential tax treatment. As long as you stay in the home two years, you will avoid being taxed on your profit (capital gain tax) to the tune of up to $250,000 in profit per individual and $500,000 for a married couple. Not too many other places in this world you can make money on an investment and NOT be taxed on the gain. (Just make sure you live there for at least two years).
Pride in Ownership....this is MY home, come over to MY house. When you're renting, you can tell people, "Hey come on over to my place" but it doesn't feel the same when you don't hold title to the property. When people OWN a home, they tend to take pride in that home, to improve the home, make it better, and then to take pride in the work they put in to beautify their home.
Comments(2)