Buying a home is still a good investment. By in large and in our area, homes appreciate about three percent a year. Some years more, some less. It can even vary from neighborhood to neighborhood. Two percent may not seem like that much at first.
But take a second look…
Presumably, if you bought a $250,000 house, and you didn't pay all cash for the it, then you got a mortgage. Let’s say you put 20%down – that would be an investment of $50,000.
At an appreciation of 3% a year, a $250,000 home would increase in value $7,500 during the first year. That means you earned $7,500 with an investment of $50,000. Your annual "return on investment" would be over 6%.
You can also consider the fact that if for some reason we don't get the appreciation that is typical, there is always inflation, that averages about 2.5% each year so either way the "return on investment is there.
Realize, you are making mortgage payments and paying property taxes, and some other miscellaneous costs. Remember, the interest on your mortgage and your property taxes are also both tax deductible, therefore the government is effectively subsidizing your home purchase.
All this considered, this means your rate of return when buying a home is higher than many other investments you could make right now.
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