With the current situation of higher mortgage rates, inflationary pressures, and concerns about a potential recession, many individuals are uncertain about whether it is the right time to purchase a home this year. However, it is crucial to weigh the long-term advantages of homeownership when making this decision.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you will likely struggle to find someone who regrets their choice. The reason behind this lies in the growth of home values over time and how it contributes to the expansion of personal wealth. This sentiment is reflected in a recent survey by Fannie Mae, where 70% of respondents expressed their belief that buying a home is a secure investment.
Let’s delve into the substantial impact of home price appreciation over the years.
Home Price Growth over Time Using data from the Federal Housing Finance Agency (FHFA), the following map illustrates the significant price gains observed in the past five years. Since home prices vary across different regions, the map provides a regional breakdown to depict larger market trends. By examining the percent change in home prices, we can observe that, on average, nationwide home prices have increased by just over 56% over a five-year period.
While some regions may slightly deviate from this average, overall, home prices have made commendable progress in a relatively short span of time. Expanding the time frame further strengthens the argument for homeownership, as homeowners have experienced substantial gains over the years. The second map demonstrates that, on a national scale, home prices have appreciated by an average of over 290% over approximately 30 years.
This nationwide average reveals that homeowners who purchased a house three decades ago witnessed their property’s value nearly triple during that period. This significant appreciation in value is a key factor behind the contentment expressed by many homeowners who made their purchases years ago.
Despite rumors of an impending crash in home prices towards the end of 2022, such a scenario did not materialize. Although home prices have stabilized following the peak witnessed during the ‘unicorn’ years, prices are already rebounding in numerous areas today. Consequently, in most markets, homeowners can expect their property values to continue growing over the next year.
When comparing the alternative of renting, it is important to note that rental prices have been steadily increasing for decades. Instead of enduring annual lease hikes with no long-term financial benefit, it is worthwhile to consider the advantages of purchasing a home.
In conclusion, if you find yourself questioning the viability of buying a home in the current climate, it is crucial to recognize the incredible long-term benefits of homeownership. If you are ready to initiate this discussion, do not hesitate to reach out to a real estate professional today.
