Your New Home: One of the Best Investments of Your Life

Homeownership is by far the single largest creator of wealth for Americans, and consumers who take advantage of today’s excellent buying climate to purchase a home will find that it is the best investment they ever made. Here are a few examples why homeownership is a solid stepping stone to a future of financial security: 

Over the long term real estate has consistently appreciated, even through periodic adjustments in local markets in response to economic conditions. On a national level, home appreciation has historically increased 5-6 percent annually. Homes appreciate on average and what has happened this past year is that builders were able to hold the line on costs.  As a positive result, builders and realtors have been reporting an increase in traffic and interest. These signals show that as the market is beginning to pick-up, the conditions are poised perfect for buying.  If you wait too long, you could miss this rare buyers’ market.

On another good note, there are fantastic tax incentives designed to make owning a home more affordable. Homeowners save nearly $100 billion annually on mortgage interest and property deductions alone. In most instances, all of the interest and property taxes you pay can be fully deducted from your gross income to reduce your taxable income. These deductions can result in thousands of dollars of tax savings, especially in the early years of the mortgage when interest makes up most of the payment.

Plus, the best tax break available to homeowners is when they sell their primary residence. A couple who own and live in their home for two years and then decide to sell can keep up to $500,000 of the profit tax-free, and a single owner can keep $250,000. If the homeowner uses these gains to buy and live in a bigger home for at least two years, the same benefits apply when they go to sell that home.

Low interest rates are yet another incentive to buying a home today.  Interest rates are historically low and affordable, remaining near 5.5 percent. Looking back, 1984 saw fixed rate mortgage interests as high as 14.75 percent. Even just six years ago, interest rates ranged from 8 to 8.5 percent. A half-percent rate difference on a $200,000 mortgage, from 5.5 percent to 6 percent, translates into an increase in monthly mortgage payments of $66.00. Over a thirty-year mortgage, that’s an extra $23,926! When rates are this attractive, it just doesn’t make sense to try and time the market.  

The bottom line is the timing couldn’t be better. If you are looking for a place to live and for a solid long-term investment, now is a good time to buy a home. With the long-term financial benefits, variety of homes for sale in all price ranges, and historically low interest rates, buying a home today is one of the smartest investments most families will ever make.