If the thought of purchasing a home is on your mind, the current landscape of higher mortgage rates, escalating home prices, and persistent concerns regarding affordability might raise uncertainties about the opportune moment to make such a significant investment. While these market dynamics hold significant weight, it's equally vital to consider the enduring merits that come with owning a home.
Contemplate this: if you're acquainted with individuals who acquired homes 5, 10, or even 30 years ago, it's highly improbable to find someone regretting that choice. Why is this the case? The answer lies in how the value of homes appreciates with time and consequently augments your personal wealth. This is perhaps why, according to a recent survey by Fannie Mae, 76% of respondents believe that investing in a home is a secure and prudent financial decision.
Let's delve into how the element of home price appreciation can accumulate significantly over the years.
Long-Term Growth in Home Prices
The illustration below utilizes data sourced from the Federal Housing Finance Agency (FHFA) to demonstrate the remarkable gains in home prices over the past five years. Given that home prices exhibit variation based on location, the illustration is segmented regionally to depict broader market trends.
Observing the percentage change in home prices, it becomes evident that, on average, home prices across the nation grew by slightly over 57% in a span of five years. While specific regions might deviate slightly from this average, the overall trend showcases a substantial increase in home prices over a relatively short period. Expanding this timeframe further underscores the benefits of homeownership and the remarkable gains homeowners have experienced over the years.
The subsequent illustration portrays that, on a nationwide scale, home prices witnessed an average appreciation of over 297% over approximately three decades. This national average sheds light on the fact that a typical homeowner, who purchased a house 30 years ago, witnessed their home's value nearly triple during this duration. This stands as a critical reason why a multitude of homeowners who made this investment years ago remain content with their decision.
Contrary to speculations throughout the year about an impending crash in home prices, such a scenario has not materialized. In reality, experts forecast a continued upward trajectory for home prices in the foreseeable future.
If you're deliberating the appropriateness of purchasing a home in today's market, it's imperative to focus on the enduring advantages inherent in homeownership. When you feel ready to embark on this journey of homebuying, I'm here to engage in a meaningful discussion.