Despite the recent slowdown of the housing market, a closer examination of the data reveals that on average, these same markets appreciated in value by more than 50 percent over the past five years.
It’s important to keep things in perspective, because the current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. However, while home values in Los Angeles fell 5.7 percent in the last year — even with this loss prices in L.A. are up 88.9 percent since 2002. In Miami, home prices dropped 7.8 percent between August 2006 and August 2007 while showing a price appreciation of 89.2 percent during the past five years.
The same pattern holds true in Phoenix and Las Vegas, which each posted yearly declines of 8 percent and 7.6 percent, respectively. However, home values surged 80.2 percent in Phoenix during the past five years and 83.2 percent in Las Vegas.
While housing is a cyclical business, experience shows that over time, home values will stabilize and then move upward with the next recovery.
Homeownership as a long-term investment has a track record that is virtually unmatched by any other purchase in terms of its real benefits. Home owners today have a combined $11 trillion in equity in their homes, against which they can borrow to help pay for college tuition, medical expenses and other needs. And housing offers important tax incentives to make owning a home more affordable
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