Record low mortgage rates and affordable home prices aren’t enough to encourage more Americans to take the home-buying plunge.
As the housing market picks up steam, four out of five Americans remain unwilling to buy a home or even refinance their mortgage, according to a recent Harris poll.
Jobs – or the lack of them – is a major factor.
The nationwide Harris survey conducted for Union Plus, the benefits arm of the AFL-CIO union trade group, found that 53 percent of respondents had major concerns about the economy – especially job loss.
Economists expected 125,000 new jobs in August, but the nation’s employers managed to create only 96,000 jobs, according to the Labor Department.
The unemployment rate fell to 8.1 percent, but only because more discouraged people left the labor force.
Among other findings, 83 percent of the Harris Poll respondents expressed concern that “closing costs for purchasing or refinancing a home are too high.”
To coincide with the study and encourage union members to take advantage of historic low interest rates, Union Plus launched an awareness campaign for union members to learn more about the advantages of buying a home.
“With only 18 percent of working families willing to invest in buying new homes, what this poll tells us, first and foremost, is that we need to help working Americans feel confident about investing in housing,” said Union Plus President Leslie Tolf. Confidence can come in knowing the benefits of homeownership.
Perhaps the largest benefit is appreciation, and right now that’s a much better bet than it has been in years.
Appreciation occurs when the value of the property increases due to supply and demand factors, home improvements and other factors.
Appreciation is like interest on an investment. It creates equity you can tap for other investments, say, to start a business, to send a kid to college or to buy a second home or investment property.
Accumulate enough equity and you can move up to a larger home or a better neighborhood or move down and save the difference for retirement.
Many homeowners rely upon appreciation and accumulated equity as a nest egg for their retirement years.
Homeownership is the mother of all tax shelters.
Inside the Mother of all Tax Shelters is the Mother Of All Tax Breaks – the deduction for mortgage loan interest. Mortgage interest payments comprise a large portion of your mortgage payment in your loan term’s early years.
Just as big is the capital gains exclusion – married taxpayers who file jointly get to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years. The amount is halved for singles or marrieds filing separately.
Also deductible is the interest on a home improvement loans, home loan points, property taxes, home-based business expenses and some selling and moving costs.
A tax professional can spell out the details of these tax benefits and others that come and go.
Your home is your castle to reconfigure anyway you see fit with home improvements and renovations – within local zoning ordinance requirements, of course, and less so if you buy a condo.
None of those benefits are available (except for the home-office deduction) when you rent or live at your parents’ home.