Most American families view homeownership as an important goal. In general, ownership provides a large element of security not available to renters. Tax laws strongly encourage homeownership, providing deductions for mortgage interest and property taxes. Additionally, owning a home has generally proved a sound investment, as home prices usually rise in step with the overall rate of inflation. Capital gains on selling a home are tax free for the first $250,000 for a single person and for the first $500,000 for a couple, if you own your own home and live in it for two out of the last five years.
Over the past three decades, the square footage of new homes has increased by approximately 55 percent from 1,500 in 1970 to 2,330 square feet today. Despite this increase in home size, the size of the average family declined by nearly 20 percent.
The average American might find the cost of today’s home beyond his or her income with recent increases in interest rates and property taxes and long-term increases in heating and cooling costs.
It might be wise to begin looking for that home you wanted but could not afford before. Many homes are entering the market at lower prices these days because foreclosures are on the rise. A total of 243,947 foreclosure filings were reported in August across the United States, up 115 percent from 113,300 in the same month a year ago; and foreclosure rates look like they will continue to rise. However, each locality is different, based on the local economy. This is why you need to begin looking now, even if you do not plan to buy until next summer, so you can get an understanding of your local situation. You then will know whether a home just entering the market is a bargain or not.
Source: Robert H. Flashman, Extension Specialist for Family Resource Management, University of Kentucky, College of Agriculture
