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As always, feel free to contact my team at www.joelfaircloth.com with any questions regarding Medford, Westampton, or any Southern New Jersey Real Estate.
7.) Home ownership builds equity Some people just don’t have the discipline to set aside money each month to save and invest. In this case, a home is more than a shelter, it acts as sort of an automatic savings account. You can build your savings in two ways: First, each month a portion of your payment goes towards the principal to build equity in your home. In the early years of the mortgage, most of your payment goes towards interest. Over time however, that turns around and your equity growth begins to accelerate. Second, U.S. home prices have always appreciated over the long term. Average appreciation on a home is 5-6 percent annually according to the National Association of Home Builders. Over time, history has shown that owning a home is a solid financial investment despite periodic market downturns.
6.) Market Timing is far from perfect No one wants to purchase a home only to see its value decline. But should you wait to buy a home until prices bottom out? A quick web search will yield a number of articles and opinions for and against timing the real estate market, but beware of those in favor or market timing who also want to sell you a how-to book or system. Many people who have tried to time the market miss out on the chance to build equity by waiting to buy until prices rise again. There are numerous charts out there that show the gradual increase - along with the typical ups and downs - of home vaues over nearly 40 years. The problem? Market cycles only become clear in retrospect. In the midst of a market slowdown, its very difficult to predict when housing prices hit their low points. In addition, most charts will show you prices at the national level, which may be very different than the housing prices in your neighborhood. Broad national indicators may lag the markets by months - meaning the actual price floor would not show up in reports until weeks or months later. Bottom line - the longer you own your home, the better chance you have of building wealth and protecting yourself from the markets ups and downs.
5.) There’s no such thing as “the real estate market” Most media reports about the housing market focus on national statistics such as sales volume and median home prices. The often-repeated statement that all real estate is local is often repeated because it’s true. It’s interesting to hear about the ups-and-downs of the U.S. real estate market, but those reports really are only useful in the context of local real estate markets. In reality, the national real estate market is made up of thousands of local neighborhoods, each with its own unique circumstances. The local economy, employment picture, tax situation, and government policies will have more influence on local housing markets than any national trends. That’s why homes in some neighborhoods continue to sell for the asking price, while across town others languish on the market despite numerous price cuts. The difference might be better schools, an exclusive location, or just a neighborhood with a prestigious name. Even within the same neighborhood, Victorian-style homes may be selling well, while Colonial models sit unsold. A condo with a striking skyline view will sell better than an identical unit facing a parking lot and a dumpster. That condo doesn’t have much impact in the national real estate market - and vice versa.
