In light of current circumstances such as higher mortgage rates, inflationary pressures, and concerns about a potential recession, some individuals are questioning whether it is still advisable to purchase a home this year. Although this year presents unique challenges for prospective homebuyers, it is crucial to consider the long-term advantages of homeownership before reaching a decision.

Think about this: if you know individuals who bought a home 5, 10, or even 30 years ago, it is likely that you will struggle to find someone who regrets their choice. Why is that? The reason lies in how home values appreciate over time and how this contributes to the growth of personal wealth. This might explain why a recent survey conducted by Fannie Mae revealed that 70% of respondents believe that purchasing a home is a secure investment.

Now, let's examine how the appreciation in home prices alone can significantly accumulate over the years.

Home Price Growth over Time

The map provided below utilizes data sourced from the Federal Housing Finance Agency (FHFA) to illustrate the remarkable price gains witnessed in the past five years. To accurately portray the broader market trends, the map is segmented regionally, taking into account the variations in home prices across different areas.

If you look at the percent change in home prices, you can see home prices grew on average by just over 56% 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 290% over a roughly 30-year span.

Over the course of the past 30 years, the typical homeowner across the nation has experienced nearly a threefold increase in the value of their home. This significant appreciation serves as a crucial factor contributing to the enduring satisfaction of those who made the decision to purchase their homes many years ago.

Despite the discussions that emerged in late 2022 suggesting a potential crash in home prices, such a scenario did not materialize. Although home prices have moderated since reaching record highs during the "unicorn" years, they are already rebounding in numerous regions today. Consequently, in most markets, it is expected that your home's value will continue to grow in the coming year.

Renting stands as an alternative to buying a home, but it is important to note that rental prices have been steadily increasing for decades. Instead of subjecting oneself to yearly lease hikes without any long-term financial benefits, it is worth considering the advantages of purchasing a home.

Bottom Line

If you’re questioning if it still makes sense to buy a home today, remember the incredible long-term benefits of homeownership. If you’re ready to start the conversation, let’s connect today.