Invest in Yourself by Buying a Home
Home Values Appreciate over Time
There has been a lot of misunderstanding about what has happened with property prices over the last two years. While they did somewhat decline in late 2022, they have been increasing at a more typical rate this year, which is excellent news for the home market. While looking at price change over only a year or two might make you nervous, history suggests that in the long run, house values grow (see graph below):
Using statistics from the Federal Reserve for the past 60 years, you can see that housing values have constantly risen. Sure, there was a blip during the 2008 housing meltdown that caused prices to deviate from the norm for a while, but overall, property values have been steadily rising.
One major reason why owning may make more sense than renting is rising house values. Equity is created as prices rise and mortgages are paid off. Growing equity increases your net worth over time.
Rent Keeps Going Up Through the Years
Another reason you might consider owning a property rather than renting is the never-ending rent increase. You're not alone if you've ever felt the squeeze of rent increases year after year. That’s because rents have climbed steadily over the past six decades (see graph below):
By buying a home, you can lock in your monthly housing costs and bid farewell to those pesky rent hikes. That stability is a game-changer.
In the end, it all boils down to this: your housing payments are an investment, and you've got a choice to make. Do you want to invest in yourself or your landlord?
By becoming a homeowner, you're investing in your own future. When you rent, that’s money you never get back.
When you factor in home values consistently rising and the opportunity to get relief from never-ending rent hikes, homeownership can be a path to financial security. As Dr. Jessica Lautz, Deputy Chief Economist and VP of Research at the National Association of Realtors (NAR), states:
“If a homebuyer is financially stable, able to manage monthly mortgage costs and can handle the associated household maintenance expenses, then it makes sense to purchase a home.”
When it comes down to it, even with high mortgage rates, purchasing a house is preferable to renting. Let's talk about your alternatives if you want to avoid rising rents while benefiting from a long-term house price increase.