About one month ago, I was asked to do a presentation on the benefits of home ownership. So, I did some research and found alot of beneficial information that I thought would be helpful for those who are thinking about purchasing a home.
You will love the feeling of a home that's all yours. But there's a much better reason to own a home of your own. It's also just about the best investment you can make. Over the past 30 years, the median price of existing homes has increased an average more than 6% every year in Florida (according to NAR's existing home sales). The appreciation will vary from neighborhood to neighborhood and region to region. But as a general rule, you can pretty much count on a 6% per year increase in value over the long run.
AT first glance, 6% per year may not seem like all that much. After all, stocks (in good times) appreciate more than that. Over the long run, stocks have averaged an annual appreciation of closer to 7%-9% and you earn as much as 6% per year with the safest investment of all a U.S treasury bond. So why buy a home?
Take a second look. Normallly, when you buy a $200,000 house, you don't pay cash for it. You get a mortgage. Let's assume that you use a down payment of as much as 20%. That would be an investment of $40,000 of your own money. All the rest of your home's purchase price is "the banks money." That's right! You bought a $200,000 asset by committing only $40,000 of your own money.
At an annual appreciation rate of 6%, your $200,000 home will increase in value by $12,000 on an investment of $40,000. Your annual "return on investment" is a whopping 30%.
Of course, you are making mortgage payments, property taxes and other maintenance costs. But remember that Uncle Sam allows you to deduct all of the interest expenses and property taxes on your home against your income taxes. So the US goverment is essentially subsidizing your home purchase. Why because the goverment wants you to own your peace of the pie so it gives you an incentive to do so. Remember also that living in an apartment or rented home isn't cheap either and all you're collecting there are ent receipts.
What's this all mean? Simply that over time, the rate of return (or return on investment) on buying a home is higher than almost any other investment you could make. Not to mention that there's a lot of motivated sellers, inventory is high and properties are at an all time low. But even better than that, you get to participate in the "American Dream" owning a home of your own! Susan Southerland Century 21 Sundance Realty