Home. Just the word usually conjures up mental images, smells, sounds in our minds eye. Home is where the heart is. Home is where we make memories. Owning a home… that’s the American Dream.
While it may be the American Dream, don’t overlook the benefits that come with home-sweet-home. Let’s take a peek…
1. Real Estate is a great long term investment. Real Estate – just like interest rates – move in cycles. It is important to keep in mind it is a long term investment and a hedge against inflation. Home appreciation has averaged 6% in the 50 year period from 1977 to 2007. And since the bubble burst in 2007, the past 50 years from 1979 to 2009 the average is 4.51%. What does the math look like on this? If you bought a home today for $300,000…the same home appreciating at 4.51% for 30 years would be worth – $1,126,825!
2. Home prices are currently at a discount. It’s like getting the price roll back at Walmart. Homes are more affordable now than at any other point in time since 1970 according to the National Association of Realtors’ housing affordability index.
3. Rates are the lowest in the history of mortgage rates…did you hear that? Mortgage terms affect your monthly payments. Check out this historical chart.
4. There is plenty of inventory. In most places it is taking many months to sell a home, creating loads of inventory…both new homes and existing homes. This gives you more choices than before.
5. It’s typically cheaper than renting. Renting deprives you of the tax benefits, which in can help in many households. Mortgage interest is fully deductible on your tax return in most cases. In addition, real estate taxes for both a first home and a vacation/2nd home are fully deductible.
6. Homeownership builds wealth in two ways – through the forced savings of paying down a mortgage and thru appreciation – (the rise in the home value over time). But don’t take my word for it – According to VIP Forum, Federal Reserve Board – the average net worth of homeowners vs renters is much greater. Its Survey of Consumer Finances consistently documents the gap between the wealth of homeowners versus renters. Take a look:
Great long term investment. Prices are at a discount. Rates are the lowest in my lifetime. Plenty of choices in inventory. Tax benefits. Build wealth. Seems like a no-brainer to me.