These days we are greeted by headlines surrounding higher mortgage rates, inflation challenges and the concern about a potential recession. All of this is building up which has many people wondering if they should consider buying a home now or hold off until a later date. While these concerns may be pertinent today it is important for one to think about the long-term benefits of homeownership.
To put it in perspective, most homeowners that bought a property 5, 10 or 25 years ago would most likely not regret their decision. The reason being is that home values grow over time and then by default so does your wealth. According to a recent survey by Fannie Mae, 70% of respondents stated that they believe buying a home is a safe and solid investment.
Across the United States home prices have increased quite a bit with some varying degree per region. According to data from the Federal Housing Finance Agency (FHFA) the national average of home price gains was just over 56% over the past five years. Another data set from FHFA shows a 30 year time frame with a national average of 290% increase in home prices. This means the typical homeowner who purchased a house 30 years ago saw their home almost triple in value over that time frame. That’s a main reason for why so many homeowners who bought their homes years ago are still pleased with their decision.
More recently you may have heard discussions in the latter part of last year that home prices would crash, but that didn’t happen. Even though home prices have leveled somewhat from the record peak we saw during the past few years, prices are already starting to creep back up again in several areas today. This means that in most areas home prices should grow in value over the next year.
Ultimately, the alternative to buying a home would be renting and rental prices have been on the rise for many years now too. So why rent and deal with annual lease increases for no long-term financial benefit? One thing is for sure is that if you are renting there will be no gain in equity for yourself where history proves that there is long term with a property purchase.