About This Lesson
The "American Dream" used to be defined by buying a home and raising a family. Today's world has many other moving parts to it, including the economy, cultural impacts and personal goals. Buying a home hasn't been at the top of many individuals' lists. However, changes to the homeownership world are in motion right now. Get to know how the real-estate climate is affecting potential buyers in 2019 and beyond.
1. Limited Tax Benefits
When the new tax laws went into effect from the 2017 bill passage, homeowners were greatly impacted. They now had a cap on deductions or eliminations altogether. Homeowners now had less of a reason to keep their properties. Lucrative tax deductions were now a thing of the past.
People who were thinking of buying a home with these incentives in mind are now rethinking their options. Buying a home is now more of an investment in your family than a tax-based decision.
2. The Millennial Factor
The generation that's significantly impacting the real-estate market today is the millennials. They're a young group of mostly college-educated individuals, but they haven't been buying property as readily as other age groups. U.S. News & World Report suggests that 2019 and beyond might include more participation from millennials.
This generation is known to put off major milestones, such as buying a home. They may start to settle down as they age, which will help move the large inventory of houses on the market today.
3. Adding in the Smart Aspect
Homeowners now understand that any improvements to their properties must include smart technologies. From home security to kitchen appliances, smart features give the home more value than others in the neighborhood.
The home might have wireless Wi-Fi, smart thermostats and Internet-connected refrigerators. Homeowners demand these conveniences, and they want to show them off to potential buyers. Upgrading the home isn't as easy as adding wall-to-wall carpeting anymore. They almost always include an electronic component at this point.
4. Looming Recession
If you're a homeowner right now, staying put and paying your monthly bills is a good piece of advice. CBS News reports that a recession is possible starting in 2021. Potential homebuyers may want to hold off on a purchase right now. During the possible recession, home prices typically drop. You can find a great deal if there's a solid down payment.
Homebuyers who need extensive financing may see difficulties during a recession. It's important to plan now so that the economy's fluctuations don't negatively impact your goals.
5. Stabilizing Home Prices
It's heartening to know that home prices are relatively stable right now; they aren't trending up or down with extreme swings. For homebuyers, this fact is encouraging. You should be able to afford a reasonable mortgage. Keep in mind, however, that certain cities still have expensive sections. Long commutes to a job are commonplace because housing is either too expensive or limited in availability. Enjoy stable prices elsewhere because they will fluctuate at some point in the future.
6. Softening Down-Payment Amounts
After the Great Recession of 2008 and 2009, down payments for a home were strictly held at 20 percent. For a $200,000 home, that down payment was $40,000. Many people just couldn't swing this type of payment.
Although the 20-percent rule is still in effect for many lenders, there is some wiggle room. Depending on your situation, the down payment may only be around three percent. Shopping around for a pre-approved loan is the best way to approach this challenge. There can be a perfect match for your budget.
Owning or renting a property comes down to personal choice. Everyone must make a decision on their housing selections as they finish school, move out or gain a promotion. Homeownership continues to be a viable way to accumulate wealth and keep it that way. Getting your foot into the front door is the first challenge.
