Last week we started talking about the financial benefits to owning your own home! This week we will take a look at appreciation!
Although Las Cruces real estate moves in cycles, sometimes up, sometimes down, but over the years, Las Cruces real estate has consistently appreciated. This consistent appreciation makes your investment in your home a hedge against inflation.
So how does it compare to other investments?
First is the fact that in the very long term over a period of 20-30 years Real Estate appreciation rates are lower than many other investments (i.e. stocks other equity instruments). They are more equivalent to the rates of return on Government Bonds. But, there are periods of great appreciation which can be taken advantage of if one is fortunate enough to not being in a situation where they are forced to sell in a period of depressed prices.
Though other investments have better long term rates of return they require an investment of cash and most people are not consistent in making this investment. Because your mortgage payment is a forced saving, and the leverage of a small one time investment in your down payment, you will almost always expect to own an asset that could be hundreds of times greater than your initial investment. The total amount of Homeownership equity in America is thousands of times greater than the total of all other sources of wealth for the great majority of Americans.
Join us again next week as we look at Equity and Forced Savings