05/20/2021
INTERESTING ARTICLE ABOUT REAL ESTATE BELOW. LET'S JUST SAY I AM A BELIEVER!!
The latest Economy and Finance survey from Gallup reports 35% of Americans named real estate “the most favored long-term investment,” a position it’s held since 2013. More than one-third of Americans go further, calling real estate “the top investment,” a title held since 2016.
How about stocks and mutual funds? They’re owned by 55% of the population, but only 21% of Americans think stocks or mutual funds are the best long-term investment, the lowest percentage Gallup has reported since 2012. That puts them in second place, far behind real estate, though ahead of bonds, gold, and savings accounts or CDs, as a long-term investment. Experts agree that buying a home is one of the best long-term investments an American can make. Here’s why.
A real estate investment is likely to appreciate over time.
A home’s market price should increase over time. As we know, home prices go in cycles, so a property’s value may not go up drastically in the short term. Still, if the owners live in their home long enough, there is a good chance they will sell it for a profit in the future. The Federal Reserve Bank of St. Louis found the average home selling price rose from $274,100 in 2009 to $382,700 in 2019, an appreciation of almost 40% over ten years. Not only is that an excellent return on an investment, it also gives the investor a place to live. It’s important to note a good part of a home’s appreciation is in the value of the land—as the old joke goes: “The three most important things in real estate are location, location, and location.”
A real estate investment builds equity.
Also increasing over time is the owners’ home equity, which begins with the down payment they made and continues to build as they pay down their mortgage principal every month and as their home’s market value grows. Americans love the fact that owning real estate lets them save money without thinking about it.
Profits made on a real estate investment could be tax-free.
Profits on investments—capital gains—are usually taxable. However, homeowners are allowed a tax-free profit on their main residence up to $250,000 for single homeowners, and up to $500,000 for married couples. Second homes are excluded and there are other requirements, so, as with all tax matters, please have clients check with a tax professional before they make any tax-related decisions.
