Considering buying a home in 2023? You’re not alone. 84% of Gen Zers plan to purchase a home or condo in the next few years. And homebuying remains a top priority for millennials, who now make up 43% of homebuyers.
Dive in to see how members of all generations can benefit financially, personally, and socially from turning their home-buying dreams into reality.
What are the main benefits of homeownership?
#1 Homeownership Is a Smart Financial Move.
Is It Better to Rent or Own?
When deciding whether to purchase a home instead of renting, consider your financial goals and intentions for your future. Homeownership can help you build equity, save on taxes, give you financial stability, and set you up for long-term financial success.
Owning a Home Builds Equity
Buying a home allows you to begin building equity in a property that will likely appreciate over time. It’s an asset in your name and an investment in your future. When you rent, you’re building equity for someone else and won’t recoup your money.
Homes Are Long-Term Investments
The housing market fluctuates yearly, but homeownership is a proven long-term investment. Federal Housing Finance Agency (FHFA) stats show that in the last five years, homes appreciated 63.5% nationally, while Utah homes appreciated more than 100%. And since 1991, they’ve gone up over 620% in Utah and 290.2% nationally. It’s likely why 88% of all homebuyers feel that their home is a good financial investment and 50% say it’s better than stocks.
Down Payments Are More Affordable Than You Think
Many first-time homebuyers are saving longer for down payments before buying, anticipating that they’ll need to pay about 20% of the purchase price. (According to the National Association of Realtors®’ (NAR) 2022 Profile of Home Buyers and Sellers, the typical first-time homebuyer was 36 years old in 2022.) While saving up is wise, keep in mind that, on average, down payments are only 6% for first-time buyers and 17% for repeat buyers.
Save on Your Taxes When You Own a Home
Homeowners enjoy several tax perks, too. If you decide to buy a home (congratulations!) and finance it, you’ll have the option to purchase discount points to lower your loan’s interest rate. Come tax time, you can deduct the cost of the points. And if you buy private mortgage insurance (PMI), you can deduct those payments on your itemized tax return. You can also deduct the interest on your mortgage balance and a portion of your property taxes. (Of course, you’ll want to talk with a tax advisor about the tax perks specific to your unique financial situation.)
And, while homeowners cover most maintenance costs and upkeep themselves, some programs can help, like Federal Income Tax Credits and Incentives for Energy Efficiency. They give homeowners up to $3,200 annually to lower the cost of energy-efficient home upgrades by up to 30%.
Homeowners Enjoy Predictable Monthly Payments
Only six states—California, Maryland, New Jersey, New York, Oregon, and Minnesota — and the District of Columbia have rent control laws. So if you rent, you’re likely subject to steep rent increases and may have to move or pay more every year.
When you own a home and have a fixed-rate mortgage, you know exactly what you’ll pay every month, which makes it easier to stick to a budget and achieve more financial freedom.
To plan for unexpected home expenses, many experts suggest you set aside at least 1% of your home’s purchase price each year for maintenance, so consider factoring that into your monthly budget.
Buying a new home can help cut those costs in the short term; builder’s warranties typically cover structural issues, and any appliances should come with warranties, too. Plus, the cost of maintenance and utilities for a new home is typically lower due to improvements in building materials and practices, so you can save more money buying a new home rather than an existing home of the same size. And during the home buying process, you can work with your builder to customize your home to suit your tastes. No need for a “honey-do list” or an expensive remodel later. You can get it done the way you want it right away, saving you time and money.
Discover Programs Designed for First-Time Homebuyers
If you’re a first-time homebuyer, explore the many government grants and programs designed exclusively to help you. You may be able to withdraw up to $10,000 from your traditional Roth IRA for buying or building a new home. Or receive mortgage rate discounts, closing cost assistance, or more.
Is Homeownership Always a Good Financial Decision?
If you want to buy a new home but aren’t sure if it’s the right time to invest, consider talking to a lender or a financial advisor. They can help you determine if it’s the right move for your future, so you can start building your equity now—or make a plan so you can.
#2 Homeownership Is a Smart Personal Move.
The feel of making a house a home. Adding the crown molding you’ve always wanted. Changing paint, carpets, and windows on a whim. You can do it all when you own your home—without red tape. Personalizing your living space on your terms is a big deal. But there are even more proven benefits beyond the freedom and joy of owning and managing your own slice of paradise.
Happier, Healthier Families
Buying your first home or buying the home you’ve always dreamed of is a huge accomplishment. And reaching that life milestone can have a significant impact on your life—and your family’s. A 2016 NAR research report, “Social Benefits of Homeownership and Stable Housing,” showed that homeowners and children of homeowners are generally happier and report higher self-esteem than non-owners and are 2.5% more likely to be in good health.
Beyond health and self-esteem, homeownership can directly impact education, too. According to a study in a journal published by the Federal Reserve Bank of New York, cited by Habitat for Humanity, “the graduation rate for children of homeowners is 19% higher than for renters, and they are twice as likely to acquire some postsecondary education.”
Plus, researchers from Ohio State University and Purdue University found that children who lived in owned homes achieved higher math and reading test scores and had fewer behavioral problems.
The positive evidence for homeownership is powerful. But some psychological benefits homeowners experience can’t be measured by studies or summed up into tidy statistics.
More Privacy
When you own your home, you can say goodbye to unwelcome pop-ins from your landlord. You get to decide who comes and goes into your home. You’ll feel safer knowing who has access to your living space at any given moment.
And your furry family members are as welcome as the rest of your home’s residents—no deposit required!
Increased Flexibility
Beyond day-to-day benefits, owning can be a major asset during unexpected life events. If you own your home, you have the flexibility to move and rent it out while you continue to build equity and deal with the crisis. As a renter, you may have to break your lease and be out thousands of dollars, on top of whatever stress you’re facing.
Enjoy Lifestyle Amenities
Some renters enjoy amenities like an in-building gym or a swimming pool. But homeowners don’t need to give up perks to own a home. In fact, buying a home in a master-planned community like Daybreak offers countless ways to spend your time adventuring or relaxing, from pools and parks to restaurants, shops, and more. (Daybreak has a freshwater lake, beach club, and 50-mile trail network to name a few.) In most master-planned communities, all owners enjoy the same perks, whether they live in a condo or a million-dollar home.
Pride in Your Investment
If you see a scuff mark on the wall when you rent, you might just leave it and think, “not my problem.” Those moments add up over time, leading to unmanaged wear and tear. When you own, you grab the paint you’ve meticulously labeled in your storage area or garage and touch it up.
Taking pride in something you’ve worked hard to own and eventually will want to sell for top dollar—or leave it to a family member to pass along generational wealth— becomes important. You might even see it as an extension or reflection of yourself or your family. So don’t be surprised if you suddenly care about curb appeal and enjoy yard work, which is an excellent way to meet your neighbors.
#3 Homeownership Is a Smart Social Move.
When you invest in a home, you also invest in a community. Whether you’re a social butterfly or an introvert, your neighborhood can keep you feeling connected, so choosing the right area is essential.
Meet Neighbors and Build New Relationships
Neighbors are important connections whether you rent or own. But if you own your home, you might live near them for several years, so your relationships are even more significant. Good neighbors can be an enormous addition to your life and keep you feeling connected to your community.
They can be helpful when you’re out of town, in an emergency, or simply need advice about the area. And if you’re new to an area, you’ll likely have owner access to neighborhood social media channels, community centers, and other resources to find people and meet who share common interests.
Get Involved in Local Activities
If you buy a new home in a community like Daybreak with a robust events calendar (offering more than 200 events every year), there’s no shortage of ways to connect with your neighbors. Check with your homeowner’s association (HOA), events team, community center, rec center, library, or school for opportunities to join in local fun. You might even end up running some events yourself!
Leave a Lasting Legacy
As a homeowner, you’ll have even more options for improving your local community. Maintaining and upgrading your home one way. But you’ll also have the opportunity to get involved with your HOA to help make decisions that can impact your area’s future and protect your investment’s value. Or you could run for city government or the school board to create an even bigger impact. Maybe you’ll join an organization or start one. The possibilities are endless when you invest in your home—and your local community.
So, Is Homeownership Really Worth It?
Whether your rent or buy is a personal decision only you can answer based on weighing the risks and benefits alongside your short- and long-term plans and goals. Start by asking yourself:
What are the pros and cons of homeownership?
Are you ready to put down roots? Do you want a home of your own? The opportunity to change it and reap the rewards? The ability to invest in your future? Consider if you’re willing to accept the responsibilities along with the benefits of owning a home. You might explore the answers to these questions:
What monthly payment can I afford, including property taxes, PMI, and HOA dues?
Is your rent more affordable than your potential mortgage payment? It might be today, but will it stay that way next year or the year after? Are you willing to spend the same amount for less square footage but more control and equity? Or maybe you’ll pay the same and get more! Research to find where your budget and tastes meet.
Do I have enough saved for a down payment and closing costs? Or the ability to secure funding?
Remember, you might not need as much for a down payment as you think. Be sure to talk to your lender to understand how much you’ll need. And explore all the available grants and programs designed to help you buy your first home.
How long do I plan to live in my next residence?
If you plan to stay for a few years, good news! You’re not only building equity, but when you sell your home, you won’t have to pay tax on up to $500,000 ($250,000 for single filers) of the gain from the sale if you’ve owned and lived in it for two of the last five years.
What’s my timeline for purchasing a home?
If your lease is up soon, you should begin exploring the available inventory in the area you want to live. A custom new build could take several months, so consider a community with inventory homes available if you’re looking for new construction.
How will buying a new home impact my lifestyle?
Owning a home can open your life to opportunities you didn’t know were possible. But it starts with purchasing a home within your means. If you’re working around the clock to afford your home, you won’t be able to take advantage of all the amenities in your area, connect with your friends and neighbors, or sit back and enjoy your living space.
But buy the right home for you, and you’ll discover all the financial, personal, and social benefits of being a homeowner for yourself.
Is it a good time to buy a house in Utah?
While the home buying frenzy during the height of the pandemic has cooled. The housing market in Utah is still very strong, especially for new home sales. In fact, the master-planned community of Daybreak located in South Jordan, Utah has seen a 21% increase in new home sales when comparing May 2023 year over year .
A few reasons why now is a good time to buy a house in Utah.
- During the pandemic homes were selling so fast, that builders couldn’t keep up with demand and buyers were purchasing homes without taking the time to truly evaluate what type of home they needed. Now that things have slowed down a bit, new home builders have reloaded their inventory of move-in ready homes. In May 2023, the median days on market according to Realtor.com was 28 days versus 20 days in May 2022, which means you have a little more time to think about your purchase before signing on the dotted line.
- A lot of builders in Utah had to stop offering the option to build a new home as a dirt start during the pandemic due to the supply chain for construction materials being backlogged. This limited choices for materials and made the option of customizing your home very difficult. Now that things have slowed down a bit, new home builders have had the opportunity to increase their supply of move-in ready homes and many are now offering the option to build a new home as a dirt start, which means you get to select the majority of the materials used in the home.
If you are thinking about buying an existing home, the market is a little tight. Mortgage rates have almost doubled in the past two years, which means that existing homeowners are not likely to move because it would mean losing their low interest rate. A recent Realtor.com survey indicated that 3/4 of homeowners felt locked into their home by their own low mortgage rate. This creates a supply issue in the market with existing inventory very low. Therefore, if you are in the market to buy a home, you are more than likely looking at new homes.
Should I buy a house now or wait?
We personally feel that it is always a good time to buy a new house in Utah, especially if you are making the decision based upon a long-term view.
The best time to buy a house in Utah is a very personal decision, but here are a few things you should know to help you make a decide when the time is right.
- Home inventory is typically the highest in Utah during the spring and summer months. This is when you will see a lot of existing homes hit the market. It is also when new home builders typically try to have a good supply of move-in ready homes.
- Winter months tend to be slower for home sales with less inventory available. Most people want to stay in their current living arrangements during the holidays and do not want the hassle of moving with snow on the ground. However, if you do need to buy a home during winter months, you may have better luck negotiating since there is less demand.
Of course, trends and seasonality can change due to a variety of factors including interest rates, the popularity of certain neighborhoods, etc.
A few things to consider if interest rates are making you question, “should I buy a house in Utah now or wait?”
- Rates are cyclical. You are not locked into a rate for life, you will likely have an opportunity to refinance when rates go down.
- While supply still doesn’t meet demand in Utah, buyers likely have more negotiating power than they’ve had in the last few years when it comes to asking for concessions.
- If you are a first-time homebuyer in Utah, you may be eligible for $20,000 in assistance. The program created by the Utah Legislature, S.B. 240 allocates funds to first-time homebuyers that can be used for down payment assistance, closing costs, and/or a permanent interest rate buydown on a qualifying loan. The program, administered by Utah Housing Corporation, only applies to new construction homes that are priced at or below $450,000. Learn more about Utah’s First-time Homebuyer Program, here.
Ready to make a move?
There’s nothing like the feeling of turning your key and opening the door to a house you’ve just purchased. The sense of accomplishment. The knowledge that you’ve invested in your future. The connection to place. And to the people around you. It’s not just a house anymore. It’s your home.
If you decide you’re ready to buy, please don’t hesitate to reach out. We’d be happy to help you find a home you’ll love.
