Your Home as an Investment

1968 is the year they starting keeping records and existing home prices have risen in every year through 2006. Even in a balanced market, home values will usually rise the rate of inflation plus 1.7 percentage points. When you buy a home it should be approached as a long term investment, even when temporary corrections have occurred in markets that became overheated. Most of the country has never experienced a downturn since record keeping began.

Here's a thought, a buyers return on his down payment is usually substantial. While it represents a small portion of the purchase price, the total appreciation is based on the total value of the home. Buying a house should not be an in and out proposition. When held for the long term, real estate is one of the safest investments a buyer can make. The rate of return on your home will dramatically increase the longer you hold on to it. How about this, after only 3 years a typical home owner will earn a 90% return and after 10 years it will skyrocket to 625%.

In the past twenty years the stock market has had wide swings while the housing market has had a continual rise in values. A typical home owner versus a renter will accumulate a net wealth of about $172,000 compared to about $5000 for the renter.