Your Home Is a Powerful Investment
Going into 2023, there was a lot of talk about a possible recession that would cause the housing market to crash. Some in the media were even forecasting home prices would drop by as much as 10-20%—and that might have made you feel a bit unsure about buying a home.
But here’s what actually happened: home prices went up more than usual. Brian D. Luke, Head of Commodities at S&P Dow Jones Indices, explains:
“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years.”
To put last year’s growth into context, the graph below uses data from Freddie Mac on how home prices have changed each year going back to 1980. The dotted line shows the long-term average for appreciation:
The big takeaway? Home prices almost always go up.
As an article from Forbes says:
“. . . the U.S. real estate market has a long and reliable history of increasing in value over time.”
Since 1980, home prices have only experienced a decline during the housing market crash, as indicated by the red segment in the graph above. Fortunately, the current real estate market differs significantly from the conditions in 2008. Notably, there is a shortage of available homes to meet the current high demand from buyers. Additionally, homeowners now possess substantial equity, placing them in a much more secure position compared to the situation in 2008. This essentially eliminates the risk of a foreclosure surge leading to a decline in prices.
The consistent increase in home values, with the exception of the four years highlighted in red, underscores the wisdom of owning a home. Homeownership entails possessing an asset that typically appreciates over time, contributing to the growth of your net worth.
Considering these factors, if you find yourself financially stable and adequately prepared for the associated costs and expenses of homeownership, buying a home could prove to be a prudent and sensible decision for you.
Bottom Line
Home prices almost always go up over time. That makes buying a home a smart move, if you’re ready and able. Let’s connect to talk about your goals and what’s available in our area.
