Buying a Home - Still a Good Investment

Reblogger
Real Estate Agent with 616 Realty LLC

Excellent post about buying a home! You have to have a plan as in any investment as to what you want to do. If we all had crystal balls, we would buy low and sell high. However, most people just need a home and have other plans. Make sure you talk to an agent  who is willing to help you think about the long term plan. Just had to share this post!

Original content by Robyn Heathcock

 

buying a home a good investment

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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