Appreciating Returns - The numbers tell the story.
As an example, let’s look at a $200,000 home. Unlike your rental unit, your home should appreciate over time. Instead of assuming average growth, we assume that prices are flat in the first year of ownership and pick up, but only slightly, in the second year. In the third year of ownership, your home has appreciated to a modest $210,858. After ten years, assuming a return to an average 4.5 percent appreciation rate, your $200,000 home will be worth $286,948. Not only do you earn a rate of return on your original purchase price, you also get a return on any subsequent appreciation.
|
Year |
Price Growth |
Home Value |
|
1 |
0.0% |
$200,000 |
|
2 |
0.6% |
$201,200 |
|
3 |
4.8% |
$210,858 |
|
4 |
4.5% |
$220,346 |
|
5 |
4.5% |
$230,262 |
|
6 |
4.5% |
$240,624 |
|
7 |
4.5% |
$251,452 |
|
8 |
4.5% |
$262,767 |
|
9 |
4.5% |
$274.591 |
|
10 |
4.5% |
$286,948 |
* Average price appreciation from 1970 to 2008 was 6.0%
But there are other, less monetary, benefits to homeownership that may partially explain the fact that buyers buy when they are ready. Several research studies indicate that homeownership adds to the value of communities, has positive effects on children, and even contributes to increased voter participation rates.
You Can’t Afford NOT to Buy a Home! Over the last ten years, the cost of rental housing in the U.S. has increased an average of 3.5% per year. If that trend continues, that means that an apartment or home renting for $1,000 per month will cost more than $1,300 a month in ten years. If you rent the same home for ten years, the total amount you would pay for rent will equal $140,777!
|
Year |
Monthly Rent (Avg. increase 3.5% per year) |
Total Annual Rent |
|
1 |
$1,000 |
$12,000 |
|
2 |
$1,035 |
$12,420 |
|
3 |
$1,071 |
$12,855 |
|
4 |
$1,109 |
$13,305 |
|
5 |
$1,148 |
$13,770 |
|
6 |
$1,188 |
$14,252 |
|
7 |
$1,229 |
$14,751 |
|
8 |
$1,272 |
$15,267 |
|
9 |
$1,317 |
$15,802 |
|
10 |
$1,363 |
$16,355 |
Total Rent Paid over Ten Years $140,777
Homeownership – It’s not just About money. Homeownership has been the American Dream. More than two thirds of American households own their own home. They know the benefits of homeownership, from the accumulation of home equity, tax incentives, and the pride of owning a place of their own.
They also had to take that first step of deciding “I’m ready to be a homeowner.” REALTORS® assisted many of today’s 75 million homeowners in both their decision to buy and their first home purchase. REALTORS® are real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and who abide by the Association’s strict Code of Ethics and Standards of Practice. They can help guide you to first-time homebuyer programs in your area, as well as assist you in searching for and buying your home.
POSTED BY:
Shuchi Agrawal
When you need Real Estate services in the Dallas Fort-Worth Metroplex
it would be my pleasure to assist you!
Check out all Dallas Fort-Worth Real Estate on My Website
972-689-1697 / shuchirealtor@gmail.com
Equal Housing Opportunity.
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