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Benefits of Owning a Home

By
Real Estate Agent with Century 21 Elite Performance

The Best Investment

As a fairly general rule, homes appreciate about five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.

 

Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could earn over six percent with the safest investment of all, treasury bonds.

But take a second look...

Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down - that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual "return on investment" would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a home is higher than most any other investment you could make.

If you are moving to a home for the first time, you are going to be very pleased with all the new space you have available. You may have to even buy more "stuff." 

Comments (3)

Ibi Sofillas
MyRealtyTeam Real Estate, LLC - Clarksburg, MD
Broker
Owning is the way to go.  And it is great to buy now, despite all the gloom and doom news!
Oct 02, 2007 08:52 AM
Jon Higgins
Century 21 Elite Performance - Springboro, OH
ABR
Sofia, that's so true, in fact that's the topic of my next blog. 
Oct 03, 2007 08:59 AM
Bill Exeter
Exeter 1031 Exchange Services, LLC - San Diego, CA
1031 Tax-Deferred Exchange Expert

Hi Jon,

It is certainly a buyers market; time to jump in and hold.

Jan 06, 2008 04:49 PM