Wealth is within reach for many people; however, according to a recent study 63 percent of Americans said it’s not likely they’ll become rich.¹ Don’t just dream of being wealthy; start taking the steps to make it a reality. There is no secret to becoming rich–it takes time, sacrifice and good financial sense. Here are a few ways to build your household’s wealth.

Let Compound Interest Work for You

Compound interest is your interest earning interest. While the concept may work against you when you take out a loan to buy a car or use your credit card, it works in your favor when you’re saving money. For example, if your savings is growing at a rate of four percent, your investment will double in eight years and quadruple in 16 years. Your money will grow exponentially the longer you save: the more money you’ve saved, the more your money will grow.

 Tap into Your Home Appreciation

Experts expect home prices to appreciate 3.24 percent and grow by 21.4 percent cumulatively.²  If a homeowner purchases a home this year for $250,000, they could earn more than $40,000 in equity over the next five years. Although the home value of the average American family’s home is $165,000, home values vary by market.³ If you’re curious about the value of your home, give us a call!

Build Equity in Your Home

One of the most compelling reasons to own a home is it allows you to build wealth over time. Saving for a down payment, especially if you plan to put down more than 20 percent, helps you adopt good financial habits. The more you put down when you buy, the higher your share of equity when you close. Although for the first five to seven years, the majority of your payment will go toward interest, over time more money will be applied to the principal. There are many tools online that calculate your current and future equity in your home, including this one here.

Build equity sooner by choosing a shorter amortization term. While your payment may be higher, you’ll likely qualify for a lower interest rate and will pay less interest over the life of the loan. 

Pay Down Your Mortgage…or Not

Many homeowners grapple with whether or not to pay down their mortgage. On one hand, if you pay it down, or pay it off early, you’ll save money on interest, which you can use to make other investments. On the other hand, if your goal is to be debt free, it’s better to pay off your higher-interest debt, such as credit card debt, first before paying down your mortgage debt. Additionally, if you’re saving for retirement, putting extra cash toward your retirement accounts will help you build a nice nest egg to enjoy later on. Your financial advisor can help you decide if paying off or paying down your mortgage is right for your goals.

Purchase Investment Property

Investment properties provide passive income to your growing financial portfolio. More than 25 percent of Americans say real estate is the best way to invest money you may not need for the next 10 years.⁴ While many people flip houses to make money—that is, they buy a home at a low price, fix it up and sell it quickly—others purchase multifamily properties to create monthly cash flow to save or to reinvest in other properties.

The longer you own a property, the better investment it becomes as you’ll continue to build equity. While rental costs rise with inflation, your mortgage will remain the same. The best part? Once you pay off the mortgage, your cash flow will increase.

There are tax benefits to owning investment property as well. You may be able to claim deductions for depreciation, as long as it fits within the guidelines; repairs, travel expenses, interest and more. If you’re thinking of purchasing investment property, talk to your tax professional to get the details.

At Karen Cannon, Realtors, we are local real estate experts for Dunwoody, Sandy Springs and North Atlanta. We live, work and play here, and our agents are hand-picked for their connections in the community. Our clients know about homes coming on the market before anyone else. And our highly effective marketing program allows us to shorten the number of days on the market. We’ve even put homes under contract sight unseen!

If you are thinking about selling your home, or are interested in moving into Dunwoody, Sandy Springs or the surrounding areas, call us at 770-352-9658.

Sources:

1. BankRate.com
2. Pulsenomics, Home Price Expectation Survey Q4 2016
3. Statistic Brain, August 1, 2016
4. The Motley Fool, July 30, 2016

 

The American housing market is stronger than ever! Home values, prices and sales had their strongest numbers in 2016, a sure sign the market is healthy and strong. According to the Home Price Index from the Federal Housing Finance Agency (FHFA), property values have increased in 58 of the last 62 months and have increased more than 35 percent nationally. Homeowners continue to build equity in their largest investment—their homes. The good news is the American real estate market is strong and healthy: home values are up, prices and sales are strong, and millennial first-time buyers are eager to become homeowners.

First-Time Buyers are Back
Housing forecasts from the National Association of REALTORS (NAR), the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae all predict existing-home sales will surpass 6 million in 2017, higher than anticipated sales for 2016. Who’s driving the surge? According to NAR, millennials who have put off buying a home are ready to buy. While they may have avoided buying a home due to student debt and limited employment, many are entering their 30s, a time when their attention turns to marriage, family and setting roots with home ownership. They’re predicted to be the driving force behind home and condominium sales from now until into 2020. (Source: MarketWatch)

What does this mean to you? If you’re a millennial who’s been on the fence about buying, now is the time to act. Give us a call to answer your questions about the market and the buying process.

Renters are Embracing Home Ownership
Additionally, many renters who’ve resisted buying are starting home searches due to the economic weight of rising rents. This year’s home buyers seek to take advantage of comparatively low interest rates and, in most cases, static payments each month—an advantage of home ownership. Rental costs will only continue to rise; if you’re thinking of buying, now is an ideal time to do so.

What does this mean to you? Every month you pay rent, you lose the opportunity to build equity in a home of your own. Break free from the limits of renting and invest in your financial future. Come in the office and we’ll discuss your options.

Home Prices are on the Rise
According to NAR, the median existing-home price not only increased 6.0 percent year-over-year in October, it’s also the 56th consecutive month of year-over-year increases. Prices are approaching the pre-recession peak.

What does this mean to you? Home prices, and subsequently home values, are increasing. If you’ve been waiting to list your home until you know you can sell it for what you think it’s worth, now is a great time to do so. We’ll be happy to give you a comparative market assessment of your home and help you get your home in list-ready shape.

If you’re in the market to buy, be prepared to act.
Homes were on the market for the shortest amount of time recorded since 2009: 52 days. The increase of qualified buyers in the market along with the increasing efficiency of the real estate process means homes are selling faster than ever, and in many cases buyers are engaging in bidding wars and paying over the list price to get the home of their dreams.

What does this mean to you? The home you have your eye on one day may be gone the next. In competitive markets, be prepared to come to the table with a competitive bid.

Looking for a New Home?
New-home construction will increase to an average of 1.5 million per year to 2024, according to a report from NAR. However, experts anticipate housing starts will only increase to 1.22 million in 2017, which is less than the 1.5 million new homes required to keep up with growing demand. This inventory shortage of new entry-level homes—typically purchased by first-time buyers—may drive up prices in some areas. Home builders have been focusing on multi-family construction for the last few years, but this type of construction has begun to level off providing hope that builders will once again focus on single-family home construction. However, stricter proposed immigration policies may impact new home construction and tighten inventory.

What does this mean to you? First-time and repeat home buyers agree—there are plenty of advantages of buying a new home. Whether you want a home customized to your family’s needs or you don’t want to bother with age-related maintenance, a new home has much to offer. Give us a call to discuss your options.

Affordability Pressures are Increasing in many Markets
Housing affordability in many of the nation’s largest cities has declined over the past few years, a trend that is expected to continue in 2017. However, there is hope. NAR created the Affordability Index to measure the affordability of homes across the United States. The Affordability Index assesses whether the typical family earning the median family income can qualify for a mortgage on a typical home based on the prevailing mortgage interest rate on loans closed on existing homes from the Federal Housing Finance Board.

The NAR Affordability Index is 170.2 (composite) and 169.8 (fixed), meaning a family earning the median family income has 170.2 percent of the income necessary to buy a median-priced, single-family home. Nationally, the qualifying income is $41,616, but it varies by region. In the Northeast, the qualifying income is $45,024. In the Midwest, it’s $32,640. In the South, it’s $36,960. In the West, it’s $61,824.

What does this mean to you? If you’ve had your eye on a new home, but weren’t sure if you could afford it, you may be pleasantly surprised. We may have homes in our area that meet your needs and budget. Give us a call today to discuss your home search.

Remember, real estate is local. While these statistics shed light on the national market, we can give you all the information you need to know about our local market. If you’re thinking of buying or selling, or just want to know how much your home is worth, give us a call!

Are you Thinking of Buying or Selling?
Whether you’d like to buy or sell a home this year, want to know how much your home is worth, or have general questions about our local market, give us a call! We’d love to discuss the market with you.