HOUSINGNEWS REPORT
FIVE FINANCIAL BENEFITS OF OWNING RESIDENTIAL REAL ESTATE INVESTMENTS
need to refinance or sell the house, and then you are back to having mortgage debt or looking for a place to live. A growing numbers of Americans — millennials, baby boomers and Gen-Xers in particular — are showing less and less interest in owning a home, according to new data from Freddie Mac. The study released by Freddie Mac Multifamily, found that while economic confidence is growing among renters, affordability concerns remain the dominant driver of renter behavior. The study found that 63 percent of renters view renting as more affordable than owning a home. That includes 73 percent of baby boomers. And 67 percent of renters who plan to continue renting said they would do so for financial reasons. That’s up from 59 percent two years ago, according to Freddie Mac. Additionally, recent trends indicate that segments such as the millennials and baby boomers are electing to rent where they want to live and invest in a single family residence to create cash flow in another, more affordable market. The following are five advantages to
“A growing numbers of Americans — millennials, baby boomers and Gen-Xers in particular — are showing less and less interest in owning a home, according to new data from Freddie Mac.”
which find that renting a home and investing instead in income-producing real estate is a better financial decision. In many areas of the country, home prices are reaching unaffordable levels for many homebuyers, especially in California. According to an article in the Los Angeles Times, California’s median home price is now $537,315, reflecting a compounded annual growth rate of nearly 10 percent since 2012, according to real estate website Zillow. During the same time period, the median rent for a vacant apartments jumped an annual rate of nearly 5.5 percent to $2,428. As a result of rapidly increasing housing costs in California, more people are leaving, according to a study conducted by Beacon Economics and Next 10, cited in the LA Times article. In 2016, 41,000 more households left the state than moved in, according to the study referenced in the article. What this means is that people
need a place to live no matter what the economy is doing. Unlike the commercial, retail and industrial real estate markets, the residential rental market (in many areas of the country) is less likely to drop as far down. Money Out of Your Pocket So is owning a home for your primary residence a good investment? To answer that question you need to understand that your personal property takes money out of your pocket each month. Every month you have to pay the mortgage, insurance and property taxes. Even if the house is paid off you are still spending money maintaining the house and paying your taxes and insurance. The house is still taking money out of your pocket, not producing income. While your paid-off house might make your net worth look good, the equity is locked up in the home. If you actually need to access that money, you either
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JUNE 2018 | ATTOM DATA SOLUTIONS
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