Many perfectly valid reasons exist for owning a home, and there are also some good reasons to rent. The best choice for you depends on a number of factors, so weigh the pros and cons of each option before deciding whether you want to be a renter or a homeowner. If you choose home ownership investment, there are multiple new homes in Knoxville TN just waiting for the right buyers to claim them.
Why Fewer Americans are Buying Homes
U.S. homeownership reached a 50-year low in 2016, although it has risen slightly again since then to just over 63%. More Americans are choosing to rent, however, for a number of reasons:
- The homebuying process is overwhelming, according to a survey of 2,000 adults that showed 71% found it daunting.
- Coming up with the down payment is difficult, with many believing obtaining a conventional mortgage requires having 20% available in cash, plus closing costs.
- Millennials and younger Gen X-ers value experiences over possessions and seem willing to sacrifice home ownership investment to spend more on experiences. Almost half of a group surveyed preferred to save money to spend on travel, instead of buying a home.
Just because renting seems to be a trend doesn’t mean it’s the best decision, however, and more than 60% of homes are still occupied by the owners. Buying a home remains an excellent investment, especially if you maximize the advantages.
Long Term Financial Benefits of Home Ownership as an Investment
Taking the step of purchasing one of the affordable new homes in Knoxville TN (some start in the mid-$300s) offers a number of long-term financial benefits.
You’ll be spending more smartly, for starters, because while rent payments go into your landlord’s pocket and leave you with nothing to show for them, mortgage payments are an investment in the future. The longer you own, the more your equity and resale values increase. The home acts as a long-term storehouse for funds, and if it’s paid off by the time you retire you can tap into the equity to fund your retirement. This will be a great supplement to your 401(k) and IRA accounts, which is going to become increasingly important as the federal government struggles to fund Social Security.
Also, sustainable homeownership enables the accumulation of wealth. The Federal Reserve’s Survey of Consumer Finances puts a typical homeowner’s net worth at around $224,710, while that of a renter was $5,130 as of 2016. This reflects an increase of 15% for homeowners over 2013 values, vs. a drop of 5% for renters.
Wisdom of Buying as Early as Possible
Homeownership investment is a long-term activity, so it stands to reason that the longer in which you own it, the more advantages you’ll enjoy. For one thing, the earlier in your life you buy, the longer you’ll have in which to pay off the mortgage. That helps keep your payments low, or alternatively, you can pay it off faster and enjoy a mortgage-free lifestyle. Interest rates are currently much lower than they might go, and homeowners are far more likely to be invested in their community than renters. The emotional benefits of new homes in Knoxville TN include stability, and the chance to establish your family in a community where they can grow and mature.
Why Home Ownership Matters
Homeownership investment is important for reasons other than the financial, too. It’s good for the economy, because every time a homeowner sells and trades up (or downsizes, for that matter), it helps contribute to economic growth and job creation. Every home sale incurs expenditures such as home remodeling, furniture purchases, moving and landscaping, which supports income earnings that are spent in the local economy.
NAR calculations show one new job is created by every two sales of new homes in Knoxville TN. In addition, it provides social benefits such as lower crime and drug usage among the children of homeowners, a higher likelihood of involvement in civic activities and volunteer work, and a better sense of self-worth.
For more information on new homes in Knoxville TN, please click here or call 1-865-966-8700 to set up a consultation.