San Diego, CA – The Wall Street Journal recently posted an article on the Long Term Benefits of Homeownership. According to the article, some of the benefits home ownership offers include long term market appreciation, tax benefits, and forced savings.
In markets with a history of supply constraints, such as Los Angeles, New York, San Francisco, and San Diego, long term appreciation is a huge benefit to home ownership. According to the Economist and their real estate pricing tool (LINK), home values nationwide have appreciated 20% over the last 20 years. In that period, Los Angeles has appreciated 114%, San Diego has appreciated 103.9%, San Francisco has appreciated 133.3%, and New York has appreciated 47.9%. Though not factoring inflation, long term ownership in supply constrained markets offer a long term appreciation benefits.
The mortgage tax deduction is another consideration. The government currently allows for a tax deduction for a mortgage up to $1 million. Consider a 30 year fixed rate mortgage of $500,000 at 3.5%. A homeowner would pay a total of $308,280 of interest over the life of that loan. Assuming a homeowner was in a 33% federal tax bracket, they would save approximately $101,640 in taxes due to the deduction.
The idea of home ownership as a savings tool is another benefit, even for home owners not located in a rapidly appreciating real estate market. Imagine a young family that purchases their first home using a traditional 30 year fix mortgage. A portion of their first payment, though small, goes to pay down the outstanding principal of their home. Each subsequent payment goes further to pay down the principal of their home until they pay the entire loan off and own the home outright.
Home ownership has a substantial amount of benefits. The article posted in the Wall Street Journal highlights several benefits, primarily long term appreciation in supply constrained markets. However, the other benefits to ownership include the tax benefits and the savings.
TaliMar Financial is a hard money lender that specializes in funding fix and flip, construction, and bridge loans in California. As a direct lender, we can fund loans within 5 business days and offer aggressive financing options. For more information on TaliMar Financial and our hard money lending programs, please contact Brock VandenBerg at (858) 613-0111 x1 of visit www.talimarfinancial.com.