The housing market will always be in flux, but according to the National Association of Realtors, it is a solid investment. This is because houses are relatively stable in value, and the rate of return on home investments has historically been higher than stocks or bonds.
If you’re looking for long-term stability in your finances, buying a house might be the right choice.
Here are seven more reasons why investing in property instead of other assets may make sense for you:
You get to invest your money where you can see it every day.
A house is a tangible asset that you can see and touch. It gives you the satisfaction of owning a valuable asset that is physically there, unlike paper assets such as stocks and bonds, which are only represented by numbers in a bank account.
You have the option to live in it or rent it out if you’re after making money from your investment immediately.
You also get to take care of it and make minor adjustments to make the place more comfortable and attractive. For example, you can add a garden, a lanai, or even a driveway!
You can also call roof repair or similar professionals in your area, for upgrades and maintenance work. This protects not only your house but also the family living there – which could be yours!
You know that what you buy today will go up in value tomorrow.
The housing market is stable, unlike the stock market. While prices have been fluctuating recently due to a spike in natural disasters and terrorist attacks, most experts agree that housing prices will increase again.
There are other factors at work, too: The US population is expected to grow by about four million people annually over the next decade; mortgage rates are projected to rise – which means housing prices may also increase.
It is a hedge against inflation.
Buying a house allows you to keep pace with inflation over time because your home’s value will likely increase as the cost of goods and services goes up.
Inflation can eat away at your money otherwise invested in bonds or certificates of deposit (CDs). However, real estate prices usually increase with inflation, which means that the investment you made today can be worth a lot more tomorrow.
Lower interest rates mean less money spent every month.
Interest rates on 30-year fixed-rate mortgages were 3.57 percent in August 2012, according to Freddie Mac. At the peak of the housing market in June 2006, the average rate was 6.23 percent. If you bought a house today, your interest rate would be less than half of what it was five years ago. On top of that, monthly payments on mortgages are fixed every month (unlike investment returns).
You can deduct some costs from your taxes.
The interest on your mortgage is tax-deductible, which means you can deduct it from the amount of income tax you’re supposed to pay.
You might be able to get deductions for other costs related to owning a house, too, depending on what they are and how long you’ve held the home.
All the money you’ve invested in a house has been working for you.
The money you spent to buy a house, repair it, and upgrade it is not gone forever. You get to keep all of that money, which means the house’s value still protects your investment. The more improvements you make, the more it will be worth in the future.
For example, if you choose to add a second or third floor to the house and build an additional garage, your property value will likely increase by about 30 percent. Landscaping will have further increased its curb appeal and value.
Your children can inherit your home.
This is one of the most significant benefits of owning a house and keeping it well-maintained over the years. You can leave your assets to your children or grandchildren, who will receive them free of estate taxes. Most states don’t impose transfer taxes on real estate transfers between parents and their children either.
Investing in property rather than paper assets allows you to sleep soundly at night, knowing that your wealth will pass on to the next generation.
Buying a house is an investment, but it’s also about the journey. Owning your own home gives you more control over how you live and who your neighbors are. You can make changes to suit yourself without worrying too much about what others think of them (though some upgrades might be necessary for selling purposes).
It may not always feel like investing – especially when you’re paying taxes on top of mortgage payments every month! But if all goes according to plan, then there will come that day where you’ll have paid off your loan in full and get to reap the rewards with little or no interest ever again. Now isn’t that worth getting excited about?