Investors and landlords reap undeniable rewards from buying property. Some debate the merits of buying a house as your residential property compared to renting your primary residence. Buying stands as the enduring wise choice in comparison to renting. Buying a home is so much more than just a financial transaction.
Historically, the real estate market offers opportunities to build equity, as well as create a hedge against inflation. The current real estate landscape is no exception.
There are several factors that influence home appreciation:
Market demand – How competitive is the market? If more people want to live in an area, and inventory is balanced or on the low side, then there are homes on the market where the property prices will increase.
Location – Location is often the most important driving force behind the market valuation.
Economic Indicators – Job growth, inflation, and interest rates all affect a property.
Despite fluctuations, the market routinely bounces back for homeowners. So, maintaining your home and making improvements alleviates the risk of depreciation.
Gallup - Positive pattern
According to the experts at Gallup, real estate has been crowned the top long-term investment for 12 years in a row. Even today, buying a home can be your golden ticket to building wealth over time. Real estate follows a safer and more predictable, positive pattern – consistently out-pacing other investments including gold, stocks, and bonds. Take a look at the graph below – it speaks volumes:
How equity changes the game
When you buy, your monthly mortgage payment pays for your housing, but it also serves as an investment. Purchasing and owning a place of residence generates both financial and emotional benefits – pride in homeownership and the feeling of security are huge intangibles. Your home’s equity gets an extra boost as home values climb - which they typically do.
History shows home values traditionally appreciate at a rate that exceeds inflation. Even though prices may vary by market, your house will likely appreciate significantly in value over time which helps you grow your net worth in a big way. As an article from Realtor.com explains:
“Homeownership has long been tied to building wealth - and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”
It is a worthwhile investment because of money savings on rent and favorable tax deductions
Understanding this dynamic remains a vital part of the equation of measuring owning versus renting. Money that goes towards rent offers no return whatsoever – an irrefutable argument for buying a house as an investment. If you put that money towards a mortgage with a fixed interest rate your monthly payment will remain the same as to your rent can increase.
Yes, incurring property taxes goes with homeownership, but certain tax benefits remain a vital part of the equation.
Buyers may qualify for some of these tax deductions after purchasing a home:
Mortgage interest deduction
Property tax deduction
Home office deduction
A best practice centers on a detailed conversation with your CPA regarding your particular financial situation.
Buying a house provides emotional benefits
Emotional and lifestyle benefits accompany homeownership:
A sense of satisfaction – achieving the milestone of homeownership fosters a unique feeling of pride.
Feeling of community – Homeowners tend to be more involved in their local communities, that leads to a stronger sense of belonging.
Stability for family – Homeowners often put down roots that affords relatives with an anchor of sorts.
Owning a home also provides numerous lifestyle benefits. Introducing upgrades to a home builds value while customization addresses personal needs and interests giving you greater control over your space and lifestyle. The thrill and satisfaction of creating a “dream space” instills an emotional connection to your residence. A positive return on the money you spend improving your house accompanies wise choices that also reflect personal taste.
The financial benefits and newfound freedoms of buying a home contribute to your health, wealth, and happiness. So, if you are on the fence about whether to rent or buy, remember that real estate has been consistently voted the best long-term investment for a reason. And if you want to get in on that action, it may make sense to go ahead and buy if you are ready and able. Call me today 941.266.0529 to see how to add value to your house before you sell it. If you are ready to start on your own journey toward homeownership, let us connect today.
