Benefits of Home Ownership

Homeownership in Hoboken, NJ can bring with it many blessings. Yet, the idea of caring for and maintaining a home, as well as affording a mortgage can seem daunting, but let's review some of the many reasons that homeownership can be beneficial.

The most obvious benefit is building wealth. The U.S. Department of Housing and Urban Development (HUD) notes that home equity is the largest single source of household wealth for most Americans.

What is home equity? Home equity is the difference between the home's fair market value and the outstanding balance of all liens on the property. Let's say you have a balance of $100,000 left on your home's mortgage, but the property appraises for $150,000. You now have $50,000 worth of home equity.

And let's not forget about appreciation. While there is no set year-to-year rate that is considered normal, reports indicate that you can expect around a 6.5 percent average value increase in your home each year.

The National Homeownership Strategy cites that through homeownership, a family invests in an asset that can grow in value and generate financial security. This is what sets homeowners apart from renters.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth. The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Real-Estate Recovery Signaled

The U.S. housing market is poised to withstand the removal of government and Federal Reserve stimulus programs and rebound later in the year, contributing to annual economic growth for the first time since 2006.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April. Sales will rise about 6 percent this year, and housing will account for 0.25 percentage point of the 3.6 percent growth.
The underlying trend is turning positive.

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Federal Reserve Biege Book/Consumer Confidence Creeping Back

If you're trying to figure out where real estate is headed in the coming months, should you listen to the Federal Reserve or do you focus on the latest pending home sales numbers?

Probably both, but here's a key fact: The Fed's latest "Beige Book" report based on economic data from each of its 12 regional member banks found positive signs in nine of the 12 regions it covered. Despite blizzards and bad weather in January and early February in large portions of the country, the Fed's regional banks found consumer spending and manufacturing output increasing.

What does that signify? Consumers are slowly coming out of their shells, regaining confidence, and beginning to feel good again about buying more goods and services.

On the housing front, the National Association of Realtors reported last week that the severe weather that paralyzed entire sections of the country also put a damper on home shopping last month, knocking down pending home sales by 7.6 percent in the process.

Home Purchases Expected to Rise

Despite the Mortgage Bankers Associations report two weeks ago that purchase applications fell to a 13-year low, mortgage analysts now anticipate home sales to restart yet again as the deadline for the $8,000 first-time homebuyer tax credit and the $6,500 move-up homebuyer tax credit. Lawrence Yun, Chief Economist for the National Association of Realtors, says the recent decline in purchase transactions is due in large part to the delay among homebuyers that have been searching for a home, then ultimately closing on it.

People who got into the market after the homebuyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales. Overall the doom and gloom of the market seems to be a figment of imagination. Jobs also seem to be stabilizing in the 9.5 to 10% range thus we can probably see a decline in the unemployment number very soon.

Enough is Enough

Thanks to the media pundits and agendicized politicians, fear seems to be the theme. Weather or not you believe we will experience a double dip, the numbers tell a different story. On a seasonally-adjusted basis, Case-Shiller's 20-city index was up three tenths of a percent -- the seventh consecutive monthly improvement in pricing. US Housing Starts have reached record lows, why is this bullish?

With less new development on the horizon the market will start to absorb what we call the resale. Inventory has creeped up recently, with housing start numbers lagging it will take a few months to factor in this level of improvement. All in all weather your in Hoboken, Jersey City or the tri state area, the numbers show a different story and as educated consumers we should recognize we are NOT heading into a great depression.