As a general rule, homes appreciate about five percent a
year. Some years will be more, some less. The figure will
vary from neighborhood to neighborhood, and region to region.
Five percent may not seem like that much at first. Stocks
(at times) appreciate much more, and you could earn over six
percent with the safest investment of all, treasury bonds.
But take a second look…
Presumably, if you bought a $200,000 house, you did not pay
cash for the home. You got a mortgage, too. Suppose you put
as much as twenty percent down – that would be an investment
of $40,000. At an appreciation rate of 5% annually, a $200,000
home would increase in value $10,000 during the first year.
That means you earned $10,000 with an investment of $40,000.
Your annual "return on investment" would be a whopping twenty-five
percent. Of course, you are making mortgage payments and paying
property taxes, along with a couple of other costs. However,
since the interest on your mortgage and your property taxes
are both tax deductible, the government is essentially subsidizing
your home purchase.
Your rate of return when buying a home is higher than most
any other investment you could make.