Given the current higher mortgage rates, inflationary pressures, and concerns about a recession, many individuals are wondering if it's the right time to buy a home. Although the challenges faced by homebuyers are unique this year, it's crucial to weigh the long-term advantages of owning a home when making this decision.
Take a moment to reflect on people you know who purchased homes 5, 10, or even 30 years ago. Chances are, you won't find many people who regret their decision. Why is that the case? The reason lies in the way home values appreciate over time, ultimately contributing to your own wealth. This might explain why, according to a recent Fannie Mae survey, 70% of respondents believe that buying a home is a secure investment.
Let's examine how significant the appreciation of home prices can be over the years.
Home Price Growth over Time
The following map utilizes data from the Federal Housing Finance Agency (FHFA) to showcase the remarkable price gains observed in the past five years. As home prices vary by region, the map presents regional breakdowns to illustrate broader market trends.
By analyzing the percentage change in home prices, on average, national home prices have grown by slightly over 56% over a five-year period.
While some regions deviate slightly from this average, home prices have generally made significant progress within a short timeframe. Expanding the time frame even further provides an even clearer picture of the benefits of homeownership and the substantial gains made by homeowners over the years (as depicted in the map below).
The second map reveals that, on a nationwide scale, home prices have appreciated by an average of over 290% over a span of roughly 30 years.
This national average indicates that homeowners who bought a house three decades ago saw their home's value nearly triple during that time. It's a crucial factor explaining why many homeowners who made their purchase years ago continue to be content with their decision.
Contrary to predictions of a housing market crash in late 2022, such a scenario did not occur. Although home prices have moderated from the record peaks witnessed during the 'unicorn' years, prices are already rebounding in many areas today. Consequently, in most markets, your home's value should continue to appreciate in the coming year.
Renting stands as the alternative to buying a home, but rental prices have been increasing steadily for decades. So why opt for renting and endure annual lease hikes without any long-term financial benefits? Instead, consider the advantage of building equity by buying a home.
If you're uncertain about whether it's still a wise decision to purchase a home at present, remember the incredible long-term benefits associated with homeownership. If you're ready to explore this further, let's connect. Contact us to set up a complimentary and confidential consultation to unpack your unique situation.