Despite the Valley’s booming economy, affordable housing continues to be an issue for many Phoenix-area families, as the increase in housing prices outpaces income growth.
That could be troubling news for the region, because higher homeownership rates benefit the community as much as homeownership benefits individuals emotionally, physically and financially.
According to the National Association of Realtors, there are several important benefits to owning your own home, including:
- Higher educational performance for children
- Greater participation in civic and volunteer activities
- Lower crime rates
- Better-maintained neighborhoods
Bank of America recently released the results of its Homebuyer Insights Report, which explores the attitudes, preferences and behaviors of the modern homebuyer.
The study found that 93 percent of those who have bought a home said they’re happier because of it, and 83 percent said they wouldn’t go back to renting.
While many recognize the financial benefits of homeownership, 82 percent said they also derive satisfaction from the time they spend on hobbies and passions since purchasing a home — including new pursuits such as gardening, cooking and interior design.
Beyond hobbies, 78 percent said they feel satisfied with the quality of their social life and credit homeownership with their improved ability to entertain and gather with friends and family.
Given interest rates have fallen in recent months to relatively low levels, we may see this start to change. After all, Phoenix offers a booming economy, a mild winter climate, plentiful options for arts, culture, sports and entertainment, and none of the natural disasters that affect so many other regions of the country.
Rent vs. Buy
Some potential buyers on the cusp of homeownership may be weighing the pros and cons of buying versus renting. There are benefits to each, with renting allowing for greater ease if you’re planning on relocating frequently and requiring less money up front.
But Phoenix area rents are skyrocketing, and Zillow calculates that it’s actually cheaper to buy than to rent in the Phoenix area if someone stays in their home for just two years and six months.
Unfortunately, many prospective buyers fear the upfront costs and self-select out of homeownership without getting all the details.
In fact, 69 percent of prospective homeowners said the biggest barrier to homeownership is saving enough money for a down payment and closing costs. The good news is that solutions exist to give prospective buyers the power to get over this hurdle.
Bank of America recently launched a $5 billion affordable homeownership initiative to help more than 20,000 individuals and families overcome homebuying hurdles, including in Phoenix. Benefits include a new down payment grant program that gives eligible borrowers up to $10,000 to be used toward their down payment, with no repayment necessary.
Homebuyers may also be eligible to receive up to $7,500, which can be used for non-recurring closing costs or to buy down their interest rate.
Increasing homeownership in the Phoenix area will be a win-win for homebuyers, our communities and our economy.
I’m proud that Bank of America is working to find solutions to make homeownership a reality for more local families.
Diana Varley-Roberts is a vice president and area lending manager in consumer lending at Bank of America.