The Long-Term Benefit of Homeownership
Some people are wondering whether they should still purchase a home this year in light of the current housing market's softening, the rise in mortgage rates, and the intensifying economic worries. Although there are particular difficulties for homebuyers this year, it's crucial to consider the advantages of homeownership in the long run when making your choice.
Think about it: it's probably difficult to find someone who regrets buying a property if you know someone who did it five, ten, or even thirty years ago. How come? The explanation is related to how equity and wealth are built up when home values increase over time.
The National Association of Realtors (NAR) explains:
“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”
Here’s a look at how just the home price appreciation piece can really add up over the years.
Home Price Growth Over Time
Even if the rise in home prices has slowed this year, recent years have seen a significant rise in property values. The chart below shows how significant those increases have been over the past five years using data from the Federal Housing Finance Agency (FHFA).
The average homeowner who purchased a home thirty years ago had their home almost triple in value over that time, according to the national average, even if home price increase varies by state and local location. This is the reason why homeowners who made their purchase of a home years ago are still pleased with it.
Home price growth is still anticipated to occur nationally in 2023, analysts say, even if it slows this year as the market cools. This means that even though the rate of increase will be less than it was at the market's peak frenzy when values surged, your house should still increase in value over the course of the upcoming year in most markets.
Renting is an option to buying a home, but rental costs have been rising for years. So why pay rent and resist yearly lease increases when there is no long-term financial gain? Instead, think about purchasing a home. It's a financial commitment toward your future that might position you for long-term success.
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