Homes appreciate at a rate of four to five percent each year on average. That number fluctuates based on many factors, including neighborhood, the home itself and dozens of other factors.
That five percent is safer and more stable than almost any other investment. Stocks rise and fall on a whim and other forms of investment can be just as unsure.
Lets use an example of a $200,000 house, with twenty percent down ' that's an initial investment of $40,000. At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your first year's ROI (return on investment) is an amazing 25%.
Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.Your rate of return when buying a home is higher than most any other investment you could make.