Why Home Buying is a Great Investment

The decision to buy a home can be one of the biggest decisions you make, but it can be made a little easier by knowing what sort of investment you will be making and understanding the factors around it. While the specifics of home appreciation, rate of return, interest on mortgage loans, and other factors will differ from one location to another, here are some concrete reasons for why buying a home can be a great investment.

Appreciation is On an Upward Trend

According to Federal Reserve Bank of St. Louis the average price houses have sold for has gone up more than 10% in just the past 5 years, and almost 40% if we look back a decade. Not only is this very impressive for the last ten years but, besides the dip between 2008-2010, this upward trend in the value of real estate seems to be continuing.

With that in mind it is important to remember that like many investments, you have to be in it for the long haul. It is recommended to keep your house for at least 5 years, but longer if possible. This will increase the chances of being able to sell your house for more.

Your Land Can Be Even More Valuable

Real estate tends to appreciate over time depending on the value of the land itself. Land appreciates on its own and can be made even more valuable by how you choose to utilize it. While you could simply tear down an old house that has fallen into disrepair and sell the land alone for a good price, adding structural value to your home is a worthy investment and increases the overall value of your land.

By adding amenities that provide structural upgrades or boost curb appeal, you can increase the value of your home. According to the 2020 report by the National Association of Realtors, millennials and the silent generation, who made up almost half of the home buying market, say that they are more likely to buy a new home for the amenities that come with new construction. This means that picking a good location for external amenities like parks is key, but also having access to new appliances and new home features that offer warranties is beneficial.

Tax and Other Benefits

Owning a home will often be the most important (and expensive) purchase you make in your lifetime. The good news is, the IRS provides a variety of tax breaks to encourage home ownership. Deductions for mortgage interest and property tax can lower your taxable income. Credits may also be available for qualified first-time home buyers or if you choose to upgrade your home with certain improvements such as clean energy.

From a tax perspective, you can also benefit from selling your home. This briefing book from the tax policy center explains that the IRS allows a tax-free profit when selling your primary home of up to $250,000 for a single homeowner and double that for a married couple. These simple tax benefits ensure that your home is financially profitable throughout ownership and continues to be profitable when you’re ready to sell.

This Only Scratches the Surface

These are some great reasons to invest in a home, but they really only scratch the surface of what is possible. So, if you are in the position to buy a home, do research for your specific location, scout it out, talk to a realtor, and make a great investment.

Ready to Invest?

These are great reasons on why now is the time to build your home. Contact Legacy Homes to get your next best investment, a new home in a growing city!