Generally speaking, real estate increases in value over time, which is called appreciation. Not every home or market will appreciate, as demand is the biggest driver for home price growth. Over the past decade, insanely high real estate demand has driven the appreciation rate to an average of 10% per year for the past 10 years, far above the usual growth rate.
The Case-Shiller Price Index from January 1987 to today has seen the median home price increase 333 percent. That's 9.7 percent per year on average. After adjusting for inflation and accounting for the 1987 median home price of $63,732 being $157,615 in today's dollars, the home's value would have increased 75 percent. Wow!
Given that most landlords use rental income to pay for property expenses -- including mortgage payments, property taxes, repairs, and insurance -- why give them your rent and let them get the value of this appreciation? You can see how a 20 percent investment in the form of a down payment can pay off handsomely over time for a landlord. Why not make it pay off for you? You have to live somewhere. Why not also use your home to build wealth you can pass on if you so choose? #buildwealth #realestate #realtorforlife
