Rent or Buy: Either Way You’re Paying A Mortgage

There are some renters that have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage - either your mortgage or your landlord’s.
As The Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.  
That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.
The graph below shows the widening gap in net worth between a homeowner and a renter:

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting with home values and interest rates projected to climb.

ILHM Luxury Housing Weekly Report

As of Monday April 4, 2016 


The Institute for LUXURY HOME Marketing National Report this week looked at 22959 luxury homes on the market. The ILHM Luxury Composite Price this week is $1,533,237. These homes have been on the market for an average of 161 days.

The Market Action Index measures available supply relative to the current level of demand. Index value above 30 indicates conditions favor the seller. See the section below for full details.

Luxury home prices have been climbing recently with a median price for the ILHM National sample this week reaching $1,533,237.

Price per square foot gives us a view to changes in how luxury homes are valued as well as how they're being constructed. Currently median price per square foot in the luxury homes is $396.

Residential prices are a function of supply and demand, and market conditions can be characterized by analyzing those factors. Watch this index for sustained trends and an early view on coming price changes.

The ILHM National market is currently in the Buyer's Market zone (below 30), though not strongly so. The Market Action Index stands this week at 28 so luxury buyers should expect to find reasonable levels of selection.

This chart illustrates the total number of homes in the ILHM sample each week. These are homes on the market for at least $500,000 in the top 10 zip codes for 31 major metro markets around the county. 

The properties have been on the market for an average of 173 days.  

A look at the local luxury markets around the country.

Real Estate: 2016 Will Be the Best Year in a Decade

A few weeks ago, Jonathan Smoke, the Chief Economist at, exclaimed“All indicators point to this spring being the busiest since 2006.”
Now, Freddie Mac has doubled down on that claim and is saying that 2016 will be the best year that the real estate industry has seen in a decade. In their March Housing Outlook ReportFreddie Mac explained:

The key indicators that have given Freddie Mac such a positive outlook are:
  • Low interest rates
  • A resilient labor market
  • An increase in household formations
  • A projected increase in newly constructed homes

Bottom Line

2016 looks to be shaping up as a great year for residential real estate. Whether you are thinking of buying or selling, now may be the time to sit down with a real estate professional to discuss the new opportunities that are arising.

More & More Singles Are Falling For Their Dream Home