This week, Cherie and I got back to basics and talked about first time homebuyers. Comprising 40% of home purchases in the Northeast, first-time buyers play a key role in the housing market. They are the source of new demand for homes and make it possible for owners of entry-level properties to trade up; creating a ripple effect that carries over to the higher-priced sectors of the market. For homeowners, it is the long-term gain in house value that builds real wealth. Home ownership builds wealth in two ways: through the “forced savings” of paying down a mortgage and through appreciation - the rise in the home’s value over time. The earlier you get in the game, the quicker you can get that appreciation working for you. The longer you wait… The Federal Reserve’s Survey of Consumer Finances has consistently found a huge gap between the wealth accumulated by homeowners and that by renters:
This Week’s Real Estate Insight: That “forced savings” aspect I discussed works only if you can keep your hands out of the cookie jar. Your home is not an ATM machine, it’s too easy to drain away your wealth with home equity loans and lines of credit.
