The Unique Value of a 30 Year Mortgage (How America Favors Private Property Ownership)
Part of “successfully” living in America involves learning how the systems work - the good and the bad.
Criminal justice. Taxes. Education. Financial. Travel. etc.
One reason most wealthy people in America own real estate is because they learn a) how the financial system incentivizes private property ownership for its citizens and b) how they can leverage it for their personal financial benefit.
One such way America systematically incentivizes private property ownership is by offering 30 year fixed-rate home mortgages paired with tax write offs for the interest paid.
It sounds so incredibly boring, but did you know many countries don’t even offer home loans like this?
Instead, all purchases must be made in cash or involve offering up existing collateral to secure the loan.
Or, if they do offer loans, because of volatile rates of inflation, they certainly do NOT offer them for 30 years at a fixed interest rate.
Because America has experienced a stable economy for so long (especially compared to many countries around the world), the long-term, fixed rate mortgage option works.
And it works to the advantage of every day people who buy and sell homes.
Given enough time, it’s almost impossible to lose when owning a home.
All that to say, homeownership isn’t for everybody all the time.
Some people’s lifestyles are transient and make homeownership more of a burden than a blessing.
Others are navigating hard times and are focused more on short term survival than long term investing.
Our current market conditions for buyers require a more long-term focus than was required in recent years past.
For sellers, leaving behind the low interest rate of yesterday for the higher rates of today is a tough pill to swallow.
Whereas you could previously buy with hopes of making money on a sale after 2-3 years, that horizon line has mostly shifted to 7-10 years.
I would change it if I could, but I can’t.
So my greatest confidence for tomorrow comes from what I see looking to the past.
The line historically trends up, and you can’t win then if you don’t start now.
[Colorado Home Prices Since 1980.
Gray Stripes = Recessions]
If you have a desire to buy or sell in the coming year, let’s chat.
Life has a way of keeping us all moving, and I’d love to be your real estate agent.
Contact me here to set up your free and confidential consultation.
Kevin
