Today’s higher mortgage rates, inflationary pressures, and concerns about a potential recession have people questioning: should I still buy a home this year? While this year has unique challenges for homebuyers, it’s essential to consider the long-term benefits of homeownership when deciding.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’ll probably have difficulty finding someone who regrets their decision. Why is that? The reason is tied to how home values grow with time and how, by extension, your wealth grows. That may be why, in a recent Fannie Mae survey, 70% of respondents say buying a home is a safe investment.
Here’s how the home price appreciation piece can add up over the years.
Home Price Growth over Time
The map below uses data from the Federal Housing Finance Agency (FHFA) to show noteworthy price gains over the last five years. And, since home prices vary by area, the map is broken out regionally to help convey more significant market trends.
If you look at the percent change in home prices, home prices grew on average by just over 56% nationwide over five years.
Some regions are slightly above or below that average, but home prices quickly gained solid ground. And if you expand that time frame even more, the benefit of homeownership and the drastic gains homeowners 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 the typical homeowner who bought a house 30 years ago saw their home almost triple in value. That’s a critical factor in why so many homeowners who bought their homes years ago are still happy with their decision.
And while you may have heard talk in late 2022 that home prices would crash, it didn’t happen. Even though home prices have moderated from the record peak we saw during the ‘unicorn’ years, prices are already rebounding in many areas today. That means, in most markets, your home should grow in value over the next year.
The alternative to buying a home is renting, and rental prices have been climbing for decades. So why rent and deal with annual lease hikes for no long-term financial benefit? Instead, consider buying a home.
If you’re questioning whether buying a home today makes sense, remember the incredible long-term benefits of homeownership. If you’re ready to start the conversation, let’s connect today.