Monday, October 12, 2009

AMERICAN DREAM OF HOMEOWNERSHIP STILL EXISTS WITH MAJOR PERKS

Once upon a time, owning the American Dream—a home, townhome or condo—was all about enjoying family life, motherhood, apple pie and a warm, crackling fireplace in the holiday hearth.

However, in the past decade or two, the goal of homeownership shifted from putting a roof over the family’s head to the greedy practice of “flipping,” moving every few years to cash in on rapidly appreciating real estate values, housing analysts say.

With the housing market in a tailspin today, real estate flippers are flipping out, and so are those owners who have used their homes and condos as cash stations, refinancing often to pullout rapidly rising equity.

The simple truth is residential real estate likely is not going to be as good an investment in the future as it has been, so don’t expect to see double-digit price appreciation for awhile, experts say.

“The housing market in the Chicago area is far from robust,” admitted a gloomy David Hanna, president of the Chicago Association of Realtors.

Dragged lower by foreclosures and short sales, existing home and condo values are down substantially over the past year in the Chicago area, although the number of home sales is improving every month, reported the Illinois Association of Realtors (IAR).

Sagging condo and townhome resale values were reported in Chicago. The median price—where half of the units sold for more and half sold for less—was $271,000 for Chicago condos and townhomes in August, down 15.3 percent from a year earlier, the IAR reported.

This is a far cry from 2004, when Freddie Mac reported that home-resale prices appreciated 29.7 percent over the previous five years. During the frenzy, some American homeowners became feverish flippers. To keep up with the Joneses the successful dream-home owner had to possess a larger, more impressive estate.

At the top of the hill was the multi-level McMansion, with its 5 bedrooms, 5.5 baths, a great room, three fireplaces, a media room with big-screen TV, lower level game and party room with wet bar, 3-car garage and 5,000 square feet of rambling space set on a half-acre of land in a gated community.

Back then, nearly 70 percent of the nation’s households were homeowners, and the number was rising, reported the National Association of Home Builders. However, the current recession, job losses and foreclosures have significantly reduced that percentage.

With the real estate boom over for awhile, get-rich-quick appreciation is a phenomenon of the past. Now, it is time for every American homeowner to step back and look at the real benefits of homeownership. Ask yourself: Does an estate-size home really make like worth living? Or, is homeownership really about enjoying family life?

For this writer, it was always about summer barbeques, and cutting the grass on Saturday while the kids ride their bikes to the nearby park to play softball.

It’s also about sitting out on the deck at the end of the day with someone you love and watching the harvest moon rise, and sharing Thanksgiving dinner at home with your loved ones. And, it’s about drinking hot chocolate with rosy-cheeked kids in front of the fireplace after shoveling snow during the holidays.

Fortunately, most Americans still believe homeownership is a fundamental first step to accumulating personal wealth, and is the primary source of a household’s net worth.

Additionally, the annual tax advantages of homeownership still exist, especially if you don’t sell. At tax time, homeowners are eligible for some lucrative tax deductions for mortgage interest and property taxes. When you do decide to sell your house profits of up to $500,000 on the sale of a principal residence are excluded from income taxes on capital gains.

So, let’s forget the greed, enjoy life, smell the roses and move when your family circumstances require it.