Real Estate Is Still Considered the Best Long-Term Investment

The housing market can seem like it is constantly in flux, from the rise in home prices to mortgage rates and even the number of homes that are available in the market. Yet, no matter what the state of the housing market may be, owning a home is still the best long-term investment you can make. This is why real estate has been voted as the best long-term investment 11 years in a row, as a poll from Gallup shows:

Even with everything that is happening in the market today, Americans still recognize the power of owning a home. Here are several reasons why this is the case.

Home Values Appreciate over Time

There has been some confusion around what’s been going on with home prices recently. While prices did dip in 2022, they’ve been appreciating at a more normal rate, which is good news for the overall housing market. However, to really take home prices into consideration, we’ll need to look back over the past 60 years.

The data in the table above comes from the Federal Reserve. You can see clearly see that the overall trend is that home prices have been steadily climbing. Of course, there was the housing crash 0f 2008 that caused prices to break the usual trend, but prices have been rising steadily since then.

Home prices being on the rise is a great reason to buy rather than rent. As prices go up, and as you pay your mortgage, you build equity. Overtime, that equity even gives your net worth a boost.

Rent Keeps Going Up Over Time

Another reason why owning a home is considered an excellent long-term investment is the rising cost of rent. If you are stuck paying rent, then you are subjected to the constant hikes in rent. Yet if you are paying a mortgage, your monthly payment is consistent from month to month, no matter what is going on with home prices.

The data in the graph below comes from iPropertyManagement, and shows just how much rent has risen in the past 60 years.

Homeownership Is A Catalyst For Building Wealth

Purchasing real estate is a solid long-term strategy for building wealth in America. Lawrence Yun, Chief Economist at the National Association of Realtors, notes that:

...homeownership is a catalyst for building wealth for people from all walks of life. A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.

As your home appreciates in value and as you pay your mortgage, your net worth will grow overtime. Since building wealth takes time, it makes sense to purchase your first home as soon as you can. If you wait to buy and continue to rent, you will miss out on your monthly housing payments going toward your home equity.

Final Thoughts

Now that you understand more about how both housing prices and rent prices have been rising throughout time, it should be clear why many Americans consider real estate to be the best long-term investment. If you are ready to purchase your first home in Southwest Florida, then contact realtor Dianne Anderson today.

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