It’s a question that looms large for many people, especially on the heels of a half-decade economic downturn that was the deepest since the Great Depression.
“As the housing market continues its long road to recovery and normalcy, it’s helpful to examine the big picture of where the market is now compared to where it was before the Great Recession,” CoreLogic Research Analyst Thomas M. Vitlo writes in the group’s September MarketPulse report.
He goes on to outline “normal” levels (an index of 100) for major housing indicators based on pre-recession averages, noting that while the current foreclosure rate (391) and serious delinquency rate (373) are high, both have fallen dramatically from their peaks.
“Total sales are still down about 25 percent from normal levels, and housing starts need to improve two-fold in order to return to normal,” he adds. “The HPI (CoreLogic Home Price Index) year-over-year change rate is triple the market level, but this faster-than-normal growth is expected as the market comes out of the trough and continues to recover.”
CoreLogic also shows that more than 2.5 million residential properties became equity-positive in the second quarter of this year and confirms that home prices are climbing. However, price growth is expected to slow as seasonal demand wanes and higher interest rates have a “marginal” impact on demand, according to the group’s Chief Economist Mark Fleming.
Along with all this data, there’s always an abundance of statistics with analysis from industry experts on home values, interest rates and long-term wealth.
In a September Special Study for Housing Economics of the National Association of Home Builders (NAHB), Michael Neal looks at homeownership as a key component of household wealth.
“Homeownership provides many benefits for US households,” he states. “In addition to providing a place to sleep or eat, homeownership also offers an opportunity for households to accumulate assets and build wealth.”
Neal also shows how the bust and recent recovery in the housing market impact individual household balance sheets, pointing to the positive effects of rising prices on an asset that is held by 67 percent or two out of every three households.
“Part of the reason why the primary residence is an important source of household wealth accumulation is because of its size on the household balance sheet,” he explains. “The median value of the primary residence across all households (in 2010) was $100,000, the largest asset held by the typical household. In contrast, the median value of financial assets and vehicles were only $17,000 and $12,200 respectively.”
I certainly agree with Neal that there is much more to homeownership than building equity. But I believe it goes much further than providing “a place to sleep or eat.”
Owning a home allows you to put down roots.
When you own a home, you become part of a neighborhood and a community. When you rent, neighbors come and go whenever leases renew, but homeowners tend to stay put longer and build their nests.
There’s also that sense of pride that comes with homeownership. After all, the property is yours. There’s never a landlord to tell you what you can or cannot do with either the home or the land. Want to plant a tree or create new gardens for flowers and vegetables? No problem when you own a home. But, it’s a sure bet that most landlords will likely frown upon digging up their land.
Indoors and out, our homes are where memories are created and shared with family, friends and neighbors.
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