The Value of Long-Term Homeownership

 

Despite the decline in home prices over the past few years, the National Association of Realtors (NAR) recently released a survey concluding that moving into a new home, particularly over the long-term, is a good investment.

 

The typical seller is experiencing positive returns, and the vast majority of homeowners see their property as a good investment, according to the latest consumer survey of home buyers and sellers.

 

Although typical sellers had been in their previous home for eight years, up from seven years in a 2009 study, first-time buyers plan to stay for an average of 10 years. Repeat buyers plan to hold their property for 15 years.

 

NAR 2010 President Vicki Cox Golder said the pattern of home buyers purchasing with a long-term intent has solidified over the past few years. “This underscores two simple facts – homeownership encourages stability, and the longer you own, the better your investment. . . Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property.”

 

According to the NAR, even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.

 

Paul Bishop, NAR vice president of research, said “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks,” he said. “Even with the turmoil created by the housing boom and bust, this indicates the long-term view of homeownership as a fundamental goal and value remains sound. In fact, the single biggest reason most people buy a home is the simple desire to own a home of their own, cited by 31 percent of respondents, including 53 percent of first-time buyers.

 

“Clearly the agenda here is sustainable homeownership,” said Ron Phipps, incoming president of the NAR. “We know homeownership matters. Long-term, it is very, very important. But we want to make sure that people who are buying homes are able to enjoy them and support them over the longer haul. . . There are people who need to rent, and that is fine. . . The market should accommodate that. But the majority of families are better off with homeownership for the long term.

 

“I think it will be interesting to watch,” said Phipps. “The market will be very creative in what it encourages. I like the entrepreneurial nature of developers and Realtors in figuring out what that future is. Right now, I am much more focused on the near future. The long-term market is strong.”

 

Other benefits of long-term homeownership include:

 

  • Social cohesion and stronger communities. Long-term homeowners move less than renters, and therefore, they stay in the same community longer.
  • Educational achievement. Studies show that the decision to stay in school is more frequent for those raised by parents who are homeowners compared to those whose parents are renters. Also, changing schools frequently due to moving can negatively impact a child’s educational outcome.
  • Civic participation. The longer a homeowner is part of a community, the more likely he is to be politically active and vote in local elections. Long-term homeowners have a higher membership in voluntary organizations.
  • Lower crime rate. It is easier for homeowners to recognize perpetrators in stable neighborhoods.
  • Better quality of home. Long-term homeowners spend more time and money maintaining their property. Neighbors can also influence other homeowners to improve their property, resulting in a better overall quality of the community.

 

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