Benefits of Owning a Home
The Best Investment
As a fairly
general rule, homes tend to appreciate about 5% a year. Some years that number will be more and in others it will be less. The figure will vary from neighborhood to
neighborhood, and region to region.
Five percent
may not seem like that much at first. Stocks (at times) appreciate much
more, and you could earn over 6% with the safest investment of
all, treasury bonds.
But take a second look…
Presumably,
if you bought a $200,000 house, you did not pay cash for the home at the time of purchase. You probably got a mortgage. Suppose you put as much as twenty percent down –
that would be an investment of $40,000.
At an
appreciation rate of 5% annually, a $200,000 home would increase in
value $10,000 during the first year. That means you earned $10,000 with
an investment of $40,000. Your annual "return on investment" would be a
whopping 25%.
Of course,
you are making mortgage payments and paying property taxes during this time, along with a
couple of other costs. However, since the interest on your mortgage and
your property taxes are both tax deductible, the government is
essentially subsidizing your home purchase.
Keeping these in mind, it means that your rate of return when buying a home is higher than most any other investment you could make.
If you are moving to a home
for the first time, you are going to be very pleased with all the new
space you have available. You may have to even buy more "stuff."
no company name available
Gretta Sheffer Minnema
Re/Max College Park Realty
(562) 472-8929