The California Association of Realtors shares some helpful home ownership insight on the income effect of native born and foreign born homeowners.

Income Effect on Home Ownership – Between the foreign born and native born population, those born in the U.S have the advantage of established networks, and no language barrier to have a higher median household income. Accordingly, the native born population is more likely to own a home than the foreign-born population. 

Furthermore, a large income gap exists between the foreign-born who are naturalized citizens and those who are not. Those who are U.S citizens nearly have twice the median household income of those who are not citizens. Numerous factors such as language barriers, lack of network and difficulty in obtaining a mortgage can account for the large income gap between the two categories of the foreign born population. Accordingly, the trend follows in home ownership rate.

Naturalized immigrants had a home ownership rate of 63 percent in 2011 in the state, while non U.S citizen immigrants had a mere 28 percent rate. Interestingly, if only comparing the native-born and the naturalized foreign-born, the latter had a higher home ownership rate than the former in 2011.

Length of Stay –  Examining immigrants by their length of stay suggests that the longer an immigrant lives and assimilates in the U.S, their likelihood of home ownership increases.  In 2011, immigrants who have been living in the country for more than 21 years have a home ownership rate that surpasses U.S-born citizens. Comparatively, immigrants who have been in the U.S for less than 11 years are two-third less likely to own a home.

Immigrants who have had more than 10 years of residency in the country on average earn nine percent more than those who have entered in the year 2000 or later. For those with more than 20 years of residency, on average earn more than 20 percent than those who entered after 1990, and about 30 percent more than immigrants entered in the year 2000 or later.

As an immigrant increases their length of stay, they become more assimilated, increase the expansion of their network, and gain more experience in the local area. Therefore, length of stay increases skill acquisition, raising their average income and thereby making home ownership more financially feasible.

Mortgage interest deduction and the housing market.

The Lawhead Team came across a great article from Houselogic.com about mortgage interest deduction and we would like to share it with our readers.

The home mortgage interest deduction saves the average home owner thousands of dollars at tax time, supports home values at the community level, and helps American home buyers get into their first house.

Having a tax deduction for mortgage interest makes owning a home more affordable because the deduction lowers the amount of tax you pay. U.S. Census data shows 37% of home owners with mortgages spend more than 30% of their income for housing. Paying less for housing means having more disposable income for savings and other household expenses.

Increasing housing affordability increases the number of renters who can afford to buy a home of their own responsibly; increasing the number of home buyers helps keep home prices stable for those who already own homes by ensuring a steady stream of new buyers.

The Lawhead Team came across a great article about buying vs. renting.  Website, Zillow, explains for renters, buying a home pays off after 3 years on average.

Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide.

The company, which lists for-sale and for-rent information on its site, has released a new analysis of what it calls the “break-even horizon,” comparing what it would cost to buy or rent the same home in a number of U.S. markets over time.

The rent-or-buy calculus varies widely depending on where you live according to Zillow.

In the combined Los Angeles and Orange counties, for example, the magic number is 4.3 years, assuming the buyer has made a 20 percent down payment. Buying wins out after only 1.6 year in the desert community of Banning, Calif. But Newport Beach, Calif., residents must wait 14 years for buying to make more financial sense than renting.

The Zillow analysis takes into account a host of factors potential buyers should think about when considering the leap, including the down payment, mortgage and rental payments, buying and selling costs, property taxes, utilities, maintenance costs and tax deductions. The analysis adjusts for inflation and forecasts home value and rental price appreciation.

Zillow senior economist Svenja Gudell said the data should help homeowners get a rough and immediate sense of whether buying makes sense in a particular area in relation to their financial situation.

“For a home buyer out there, it is really tough to get a good grip on the buy-versus-rent decision,” Gudell said. Although buying a home is a deeply personal decision, she said, the analysis gives consumers “a sense for, ‘Am I ready to make this decision?’ ”

The new take on the classic rent-versus-buy debate comes at a tenuous moment for the housing market. Many analysts believe that a housing bottom has been reached but don’t expect a return to the heady days of the real estate bubble. There is already some concern about the strength of the recovery, with home sales slowing in June as inventory remained tight and buyers paid higher prices.

At the same time, rents are rising, housing affordability is at record levels, and mortgage interest rates remain very low. These factors are prompting many renters to consider homeownership.

Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California-Los Angeles, noted that the main lesson from the subprime mortgage debacle and the housing bust was that homeownership shouldn’t be pushed at all costs. Federal policy has been adjusted to support this new point of view.

“One of the things we have learned in recent years is, obviously, house prices don’t always go up, and even over the very long term in certain markets, homeownership may only offer a minimal return,” Gabriel said.

“What we have all learned is to treat homeownership as a bit of a dangerous animal. You know it’s not always good, and it’s not good for everyone.”

Things to consider when buying, particularly in a slowly appreciating market, include how mobile you will be, your financial situation, marital status, career goals and personality, Gabriel said.

Richard Green, director of the Lusk Center for Real Estate at the University of Southern California, added that in many regions buying has become increasingly attractive compared with renting. There are also non-financial reasons for buying.

“I can enjoy living in this house for the rest of my life, and nobody can throw me out of it,” he said. “You are consuming something, and you have control over it, and control has some value.”

Looking to stop renting and buy your own home?  According to Zillow it is better than renting and with the help of The Lawhead Team, the dream of owning your own home can now become a reality.

The Lawhead Team came across a very interesting survey done by Fannie Mae about what exactly motivates consumers to own their home vs. rent.  Even the deepest housing crisis since the Great Depression wasn’t enough to dampen Americans’ desire to own their homes.

A recent study by Fannie Mae came to that conclusion and tried to answer some major questions: What influences consumers’ current home ownership status? What would motivate people to buy versus rent in the future? And are we influenced by unconscious biases that lead us to make less than ideal choices, such as buying too much house, or others that might prevent a well-qualified renter from buying at all?

Naturally, Fannie Mae — the government-owned housing agency — has a reason for investigating: the answers to these questions have implications for housing policy makers and the industry. And the survey found that home ownership still appealed to the majority of Americans: 85 percent said owning makes more sense than renting over the long term, and 64 percent of those polled said that they would buy a home if they were going to move.

The survey, which analyzed Fannie’s monthly housing survey data for all of 2011, looked at three different groups of consumers: renters, homeowners with a mortgage, and those who own their homes outright. (The Fannie Mae National Housing Survey polls 1,000 adults each month across the United States with more than 100 questions about the economy, household finances and owning and renting; this study’s full-year data includes information from more than 12,000 people.)

Researchers found that demographics — including income, age, marital status and employment status — were the primary drivers behind individuals’ current home ownership status, as well as what influenced outright homeowners’ future intentions to own or rent. And perhaps not surprisingly (particularly when mortgage underwriting is tighter) homeowners with mortgages were more likely to be middle-aged, married and employed full time with higher incomes, whereas the converse was true for renters. Outright owners tended to be older, more likely to be retired, widowed and past their peak earnings years, the study said.

But the intentions of renters and people with mortgages to buy or rent as their next move were largely driven by their financial and housing attitudes, the study said. The most influential belief was whether they thought “owning or renting makes sense financially over the long term,” which influenced all three groups, and especially renters. The perceived ease or difficulty of getting a mortgage influenced the intention of homeowners with mortgages, the study said, but wasn’t as big a factor for renters.

Meanwhile, the Fannie Mae study results also found that once consumers buy a home, get a mortgage and have a positive experience owning, they wanted to continue to own. But concerns about affordability — both for the home purchase itself and upkeep — was a major factor that discouraged renters from taking the plunge.

“For renters and mortgage-owners, aspirations for and belief in home ownership play a major role in decision-making, possibly forming a ‘home ownership optimism’ in determining whether they expect to own or rent in the future,” the Fannie Mae study said.

“It is possible that many of these drivers, especially the attitudinal ones, act as automatic or unconscious biases that lead consumers to less fulfilling and less successful housing choices,” the researchers said, adding that further research is necessary.

The Fannie Mae researchers also found that exposure to default, perceived appreciation or depreciation in home value, and self-reported underwater status had only a minimal effect on predicting whether a consumer intended to buy or rent for their next move.

The Lawhead Team would like you to share with us what has influenced your decision to buy or rent.  Has the recent housing crisis altered your views on home ownership?