It’s easy to be down on the housing market these days. After all, more than 16 million U.S. homeowners now owe more on their mortgage loans than what their house is worth. In other words, they’re underwater. But, as a recent Associated Press story shows, owning a house is still a good investment, despite the struggles we’ve seen recently in the housing market.
According to the story, U.S. homes have appreciated by an average of 4 percent every year since World War II. That includes the recent real-estate-slump years, so that 4 percent average is pretty impressive.
The Associated Press story offers even more evidence of the wisdom of investing in residential real estate. The story mentions that homes act as a buffer against inflation. It also points out that they provide tremendous tax benefits for owners.
Finally, the story cites one more figure that shows what a strong investment residential real estate is: When homeowners make a down payment of 10 percent on their residence, they’ll receive an amazing 1,000 percent return if the price of their home doubles.
The story also points out that homeowners must usually own their residence for a long enough time to ensure that they’ll enjoy all of these benefits. The author of the story says that homeowners who own their residence for at least 10 years will almost always see their homes significantly appreciate in value. That’s because they’ve owned their condominiums and single-family homes long enough to outlast any downturns in the housing market.
Of course, some housing markets are better than others when it comes to appreciation. Those buyers fortunate enough to live in Chicago have a great opportunity to make money on their housing investment. This is especially true for buyers who purchase in such traditionally strong city neighborhoods as Roscoe Village, Lakeview, Ravenswood, Lincoln Park and Lincoln Square. Housing in these neighborhoods holds its value, even during down markets.
So the next time you read about how terribly the housing market is struggling, remember to take the long-term view. If you hold onto your Chicago home for a long enough time the odds are great that your residence’s value will rise significantly.
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