Is Homeownership Still A Good Investment?

Yes, as long as you can afford it.  It is a great investment now more than ever if you plan on staying in the home for awhile.  If you didn’t get a chance to read my “Tips On Buying A Home” under Mortgage Education 101, be sure to take a look because I go into detail about it.

“Economists say home prices have risen by about half a percent a year above inflation, or roughly 4 percent, since the 1940s.”  This is a very important statement for a number of reasons but most importantly is that home prices track inflation.  If economists know this and if you look at a chart of inflation, how do they not prevent these boom and bust periods?  During the boom home prices were well above inflation, shouldn’t that have been a signal for us?  Don’t rely on all of the “bright minds” on Wall Street, in our government, etc.  Take it upon yourself to make sure you pay attention to this when buying a home.  We can’t control what the government does but we can control what we do.

The good news from all of this is that home prices are back around where inflation is.  I heard on a conference call about 6 months ago a comment about how they bet people who bought after the recession in the 90’s are happy.  I guess this person was right “You won’t find many skeptics among people who bought homes in the ’90s and still live in them. Their homes may be worth tens of thousands of dollars less than at the peak, but they’re still frequently worth twice what the buyers paid.”