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Is Real Estate Still a Good Investment?


Posted: August 23, 2021 by Vicki Jackson and Mike Shuttleworth

With prices of real estate going up daily, you may be asking yourself if real estate is still a good investment? Historically real estate has always been the “go to” financial investment for individuals that are looking for a strong investment that has little risk associated with it.  Let me explain, although no one can guarantee what home values or mortgage rates will be a year from now, the experts generally agree that  mortgage rates will go up and home prices will continue to rise, albeit at a more “normal” rate of appreciation, approximately 5.9%.

Let’s look at how this works:
- If the experts are right, home values will appreciate by an average of 5.9%
- The average interest rate today 2.97

If you want to buy a home for $350,000 today with 10% down, it will look something like this:

Item

Purchased Today

Purchased in a Year

Price of Home

$350,000

$370,650

Mortgage Rate

2.97

3.18

Mortgage Amount

$315,000

$333,585

Mortgage Payment

$1,323

$1,439

Equity Gained

$20,650

$0


This is a good illustration of the financial impact of waiting a year
- You pay an extra $20,650 for the house
- You need an additional $2,065 for a down payment
- You pay an extra $116/mo in your mortgage payment
- You lose $20,065 in equity

There are always many factors to consider when buying a house but from a purely financial perspective, it is better to jump into the market today than wait a year.  As an extra bonus, if you sell a home before you buy, you have probably amassed equity that you can use to purchase your new property.


(statistics were taken from Keeping Current Matters)

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