| As a long-term investment,
homeownership is still one of the best investments for individual
households. “Why” you may ask? After all, the
headlines say the housing market is down and out, with defaults
rising at an alarming rate, and mortgage markets so frozen
that buyers can’t get a home loan at any price.
What buyers need to realize is that housing markets, like
all markets, inevitably have their ups and downs. And homeownership
has a track record that is virtually unmatched by any other
purchase in terms of its real benefits.
Homeownership’s Real Value
Here are a few examples of why, dollar for dollar, homeownership
is a solid stepping stone to a future of financial security
and the single largest creator of wealth for many Americans.
Over the long-term real estate has consistently appreciated,
even through periodic adjustments in local markets in response
to economic conditions. On a national level, home appreciation
has historically increased 5-6 percent annually, report
economists at the National Association of Home Builders.
Five percent may not seem much at first, but here’s
an example that will put it into perspective: Say you put
10 percent down on a $200,000 house, for an investment of
$20,000. At a 5 percent annual appreciation rate, that $200,000
home would increase in value $10,000 during the first year.
Earning $10,000 on an investment of $20,000 is an extraordinary
50 percent annual return. In contrast, putting that $20,000
down payment into the stock market and getting a 5 percent
gain would only yield a $1,000 profit.
Compared to Stocks
Looking at it another way, over a longer period of time,
if someone put $10,000 into the stock market in 1996, the
average annual S&P return would make that investment
worth $21,500 today—an increase of $11,500. The median
home price in 1996 was $140,000. Today, that same home would
have gained nearly $100,000 in value.
Don’t miss out on the benefits of homeownership!
Contact Omega Realty 410-654-6683 x 711 to get started!
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