As a fairly general rule, homes appreciate about five percent
a year. Some years will be more, some 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 six percent
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.
You got a mortgage, too. 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 twenty-five percent.
Of course, you are making mortgage payments and paying property
taxes, 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.
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." |
