Why Owning a Home Wins in the Long Run

Higher mortgage rates, inflationary pressures, and concerns about a future recession have some individuals wondering if they should still buy a home this year. While this year presents unique hurdles for homebuyers, it is critical to consider the long-term benefits of homeownership when making your selection.

Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how home values grow with time and, by extension, how that grows your own wealth. That may be why, in a recent Fannie Mae survey, 70% of respondents said they believed buying a home was a safe investment.

Here’s a look at how just the home price appreciation piece can really add up over the years.

Home Price Growth over Time

The map below uses data from the Federal Housing Finance Agency (FHFA) to show just how noteworthy price gains have been over the last five years. And, since home prices vary by area, the map is broken out regionally to help convey larger market trends.

If you look at the percent change in home prices, you can see home prices grew on average by just over 56% nationwide over a five-year period.

Some regions are slightly above or below that average, but overall, home prices gained solid ground in a short time. And if you expand that time frame even more, the benefits of homeownership and the drastic gains homeowners have made over the years become even clearer (see map below):

The second map shows, nationwide, home prices appreciated by an average of over 290% over a roughly 30-year span.

 This nationwide average tells you that the typical homeowner who bought a house 30 years ago saw their home almost triple in value over that time. That’s a key factor in why so many homeowners who bought their homes years ago are still happy with their decision.

And, while there were rumors of a housing bubble in late 2022, it never materialized. Despite the fact that housing prices have softened since the 'unicorn' years, prices are already rising in many locations today. That means your home's value should rise in most markets during the following year.

Renting is an alternative to buying a home, and rental prices have been rising for decades. So why pay rent and suffer with annual lease increases when there is no long-term financial benefit? Consider purchasing a home instead.

Bottom Line

If you’re wondering if it still makes sense to buy a home today, remember the incredible long-term benefits of homeownership. If you’re ready to start the conversation, let’s connect today.