Is a Home a Good Investment?

As a fairly general rule, homes appreciate about four or five percent a year. Some years will be more, some less. The figure will vary from neighbourhood to neighbourhood, and region to region.

     Five percent may not seem like much at first. Stocks (at times) appreciate much more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds.  But, take a second look ...

   Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage and lets say you put as much as 20% down, that would be an 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 annual " return on investment" would be a whopping 25%!

   Of course you are making mortgage payments and paying property taxes, along with a few other costs. Your rate of return when buying a home is much higher than most any other investment you can make. If you would like to know more about other home buying ideas or tips, let me know and I will gladly see that you are informed and knowledgeable before you purchase.