Considering higher mortgage rates, increasing home prices, and affordability issues may raise doubts about buying a home now. However, it’s crucial to also weigh the long-term advantages of homeownership.
People who purchased homes 5, 10, or 30 years ago tend to be content with their decision because home values typically appreciate over time, contributing to personal wealth growth. This satisfaction is reflected in a recent Fannie Mae survey, where 76% of respondents view buying a home as a secure investment.
Here’s a look at how just the home price appreciation piece can really add up over the years.
Home Price Growth over Time
The map below uses data from the Federal Housing Finance Agency (FHFA) to show just how noteworthy price gains have been over the last five years. And, since home prices vary by area, the map is broken out regionally to help convey larger market trends:
If you look at the percent change in home prices, you can see home prices grew on average by just over 57% nationwide over a five-year period.
Some regions are slightly above or below that average, but overall, home prices gained solid ground in a short time. 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 297% over a roughly 30-year span.
The nationwide average reveals that homeowners who bought a house 30 years ago saw their home’s value nearly triple over that period. This significant appreciation in home value is a primary reason why many long-time homeowners remain satisfied with their decision to buy.
Despite earlier speculations about a potential crash in home prices, this scenario has not materialized. On the contrary, experts are forecasting that home prices will continue to increase in the coming years.
When contemplating the decision to buy a home today, it’s crucial to consider the enduring benefits of homeownership. Whenever you’re prepared to begin your homebuying journey, feel free to reach out for further guidance.