Wow! What a time to buy a home in Asheville … one of the country’s favorite cities. For years the real estate community in Asheville falsely believed we were immune to a burst in our ever expanding bubble. It burst … and has provided excellent opportunities for high end buyers. While homes that have closed since January 1, 2009 still bring 95% or so of the list price, most have provided generous price reductions.
We just got back from a beach vacation and while I was there I snooped around the Net for some information to include on our web site. I found the following comparison worth sharing. The article is taken from the National Association of Homebuilders. Even in the current economy, it’s hard to beat an investment in real estate … and enjoy our cool, green mountains!
Homeownership’s Real Value
Here are a few examples of why, dollar for dollar, homeownership is a solid stepping stone to a future of financial security and the single largest creator of wealth for many Americans.
Over the long-term real estate has consistently appreciated, even through periodic adjustments in local markets in response to economic conditions. On a national level, home appreciation has historically increased 5-6 percent annually, report economists at the National Association of Home Builders.
Five percent may not seem much at first, but here’s an example that will put it into perspective: Say you put 10 percent down on a $200,000 house, for an investment of $20,000. At a 5 percent annual appreciation rate, that $200,000 home would increase in value $10,000 during the first year. Earning $10,000 on an investment of $20,000 is an extraordinary 50 percent annual return.
In contrast, putting that $20,000 down payment into the stock market and getting a 5 percent gain would only yield a $1,000 profit.
Compared to Stocks
Looking at it another way, over a longer period of time, if someone put $10,000 into the stock market in 1997, the average annual S&P return would make that investment worth $21,500 today—an increase of $11,500. The median home price in 1997 was $140,000.
Today, that same home would have gained nearly $100,000 in value.
