Home ownership in 2013
By Nancy Russell, Vice President CBRB
In the last six years, we have been through once-in-a-lifetime major economic disruptions. In 2006, we saw the collapse of the real estate market. Then in 2008, we experienced the banking and financial system meltdown. These events have caused both hard and soft shockwaves through our society.
The hard shockwaves are things we can see, like lower home prices, retirement savings, 401Ks losing value, etc. The soft shockwave are the negative psychological effects due to dislocation and uncertainty. However, over the last few years an optimistic momentum has been building in the real estate market. The common negative indicators like foreclosure rates, short sales, shadow inventory and upside-down mortgages are all pointing more positive for 2013. As we put 2012 in the rearview mirror and look to an optimistic 2013, I believe it's now back to the basics of why you should own a home.
One of the primary goals of home ownership should be the building of equity in the home. Equity is simply the difference between the current value of a property and the balance of your mortgage obligation. As a renter, your monthly rent check goes to the landlord, which in turn helps the property owner build equity. As a home owner, your monthly mortgage pays down your loan. If all things were to remain the same and your home value never changed, you would be building equity simply by paying down your loan each month, thereby owing less. However, with a positive real estate outlook for 2013 and beyond, your home value will actually increase. This is a net benefit for you and gets better over time.
Another benefit to home ownership is the tax breaks. A home mortgage interest deduction allows you to reduce your taxable income by the amount of interest paid on the loan of your primary residence. Also, state and local property taxes can reduce your overall federal tax burden. Finally, and it does not matter which side of the climate change argument you fall on, there are federal and state green energy tax write-offs.
On the state level, there is the Residential Renewable Energy Income Tax Credit. The state of Massachusetts allows for up to $1,000 personal tax credit for the following technologies; solar water heat, solar space heat, photovoltaic, and wind. There are many more, some are state wide and some are utility rebate programs for specific towns. On the Federal level, there are many that can be viewed on websites like http://energy.gov/savings.
Finally, do not overlook the social benefit of home ownership. We need to feel rooted in something in order to be safe. Renting is viewed as something that is temporary, and you do not have the freedom of making the space your own. Home ownership allows us to decorate and organize our belongings is a personal manner. Therefore, our home becomes an extension of ourselves and connects us to a community. Recent studies still show that home owners are happier and healthier than those that are in long term rental situations.
In summary, I have outlined just a few benefits for home ownership. There are many more and I would be more than happy to discuss them with you. Since 2006, we have been through some tough economic times. All indicators are positive for 2013. I wish you all good health and prosperity in the New Year. If you are looking to sell or buy a home, call me. I will exceed your expectations.
“Whatever Nancy touches turns to SOLD.”? Call me at 508-243-8128 or by e-mail Nancy.Russell@nemoves.com. Visit my website at www.nancyarussell.com for more information, or stop by the office located at 2 Maple Ave. in Shrewsbury.
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