What are the top 5 reasons to buy a home now? If you’re not asking this question, you should be–so that you can share the answers with your buyers! With a shifting market and economic indicators adding uncertainty to the mix, it helps if you can provide your buyers with good information.
These top 5 reasons to buy actually remain the same each and every year. Why? Because of how the housing market actually works. The longer someone stays out of the housing market, the longer they deprive themselves of significant wealth building opportunities and tax benefits.
The Top 5 Reasons to Buy a Home Now
1. Investment Value Grows as Equity in Your Home through Appreciation
Funds a buyer spends for down payment on a home are similar to an investment. These funds become equity within the home. As a result, they also unlock the buyer’s ability to earn additional money through home price appreciation.
Comparing investments in savings accounts to home price appreciation shows this potential for the buyer. According to Nerdwallet, the national savings average is 0.24% Annual Percentage Yield (APY). High-yield savings accounts can earn up to 2.00% APY. Therefore, investing $20,000 into a high-yield savings account would earn about $400 after a year, and after five years about $2,081.
With home appreciation, the buyer’s investment might go much farther. Using the $20,000 as a down payment on a home could yield much greater profits. The average annual rate of home appreciation in Arizona since 2000 is 5.76%. A home priced at $400,000 that rose in value at that rate would be worth $529,257 at the end of five years. This would yield a profit of $129,257. Of the top 5 reasons to buy a home now, the ability to make this kind of profit should really get your buyer’s attention.
2. Home Values Rise Over Time, Even After Inflation
While home prices both rise and fall, the long term experience shows homes to be superior investments for buyers. On average, home values have been rising higher than in the past, even after adjusting for inflation. According to Visualcapitalist:
|Year||Average US Home Value|
The average US home value from 2000 to 2020 reflects 106% increase over a 20-year time span.
By comparison, inflation from 2000 to 2020 shows a cumulative price increase of 50.30%.
3. Build Your Wealth–Not Your Landlord’s Wealth (One of the Most Important of the Top 5 Reasons to Buy a Home)
Homeowners benefit from having their monthly housing payment go towards paying the principal on their mortgage loan. This has the effect of building equity in their home. They are effectively building wealth with their payments. As a result, they are increasing the difference between what they owe on their mortgage versus the value of their home. This adds to their wealth.
If your buyers are currently paying rent, they are not building any wealth at all. It is their landlord that is building wealth. As a REALTOR®, you might want to be sure to highlight the wealth building aspect of home ownership. In fact, in some markets, a starter home’s mortgage payment may be less than average rent prices. In these cases, buyers can start building wealth and actually save on their monthly housing expenses at the same time!
4. Refinance is Always an Option
One of the top 5 reasons to buy a home now relates specifically to interest rates. Clearly rates are a sensitive subject, as their rise or fall may impact a buyer’s ability to qualify for a mortgage. However, there are many options available to buy down rates. Also, many people forget that they can always refinance if rates decline in the future. The best thing about mortgage lending is the creativity of solutions a well qualified lender can offer. Lenders may even be the reason a deal stays on track that otherwise would not have gone through.
5. Tax Benefits Available Only to Homeowners
Three simple words to share with your buyers:
Mortgage Interest Deduction
The federal government may allow buyers to deduct the full amount of their mortgage interest on their income tax return. This deduction could help homeowners reduce their taxable income, and thereby save thousands of dollars on their tax return.
How Many of the Top 5 Reasons to Buy a Home Now Do You Need?
Homeownership includes home value appreciation, wealth building, tax benefits, and creative solutions for financing. All of these usually provide a significant incentive for buyers to become homeowners. If buyers are hesitant, it may be because they need to be shown how much ownership will benefit them in both the short and long terms. You can help educate them about all of these reasons and help them understand all they stand to gain when they buy a home. Share the top 5 reasons to buy a home now and watch as they understand the implications.
Keller Williams Arizona Realty is widely known as the best Scottsdale real estate brokerage. Our industry-leading coaching program provides all of the tools and education that real estate agents need to be successful.
Contact us today to learn more about the many opportunities available for your real estate career at our brokerage. Our Leadership Team is glad to share about all the benefits KWAZ offers to our agents.
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