As millennials flood the home buying market, many are purchasing condominiums to begin their path to building wealth through home ownership.
“The correlation between home ownership and wealth building is often a discussion we have with first-time millennial homebuyers at Juhl, downtown Las Vegas’ luxury condominium community. Some recognize the tremendous impact home ownership can have on financial growth while others are getting up to speed on the how’s and why’s of home ownership as a powerful long-term investment,” said Shahn Douglas, chief marketing officer for DK Las Vegas, which owns Juhl.
“And our low down-payment financing for first-time buyers – as low as 3% down – is especially helpful to make ownership a reality,” she added.
According to a Federal Reserve’s Survey of Consumer Finances, the median homeowner had $254,900 in wealth in 2019, compared with $6,270 for the median renter.
“In brief, said Douglas, home ownership empowers you to gain wealth in the form of equity and resale value, plus it allows you to benefit from a fixed mortgage rate and predictable expense over time. Then there’s the added financial benefits like home ownership tax breaks.”
According to a recent study by the National Association of Realtors, middle income households that bought a home in the last ten years have enjoyed substantial wealth gains with “housing-wealth” increasing by over $8 trillion since 2010. In 2021, homeowners with mortgages gained more than $3.2 trillion in equity in the third quarter of 2021 compared with a year earlier, according to CoreLogic.
When you purchase a home or condo with a mortgage, a portion of every payment pays down the loan. This means that with each payment, you’re steadily building equity in your home or condo and building net worth. This creates what the NAR calls “housing-wealth,” which is built up over time by paying off the mortgage debt and by price appreciation.
It’s relatively simple: Principal Payments + Price Appreciation Gains = Housing-Wealth Gain.
In other words, your home steadily gains in value as the market appreciates. Plus, as you progressively own more of the home, you’re in a better position to leverage your home as an investment or make a profit when it’s time to sell. When you rent, you are helping your landlord build wealth.
Homeownership also offers another perk for wealth-building – fixed mortgage rates. With a fixed rate mortgage, you’re locking in the monthly expenditure, providing predictability even in a changing economy. Rental costs on the other hand rise year to year while a mortgage payment may be the same in fifteen years as it is this month.
As one of the most stable assets, a home can be one of the smartest investments you’ll make as you see your net worth grow over the years as you build equity.
Whether you’re a first-time homebuyer looking to begin wealth building through home ownership, or you’ve been accumulating wealth for years and you are ready for a vacation home in Las Vegas, Juhl, with its downtown Las Vegas location and contemporary high-rise condo lifestyle, should be on your radar.