For a few years during the last decade, homes in all parts of the country were appreciating upwards of 15 percent year-over-year. We all know that the housing market came to a halt when the credit crisis happened a few years later.
Even though the real estate market is back in many parts of the country, things are different today. A generation ago, a buyer would purchase a home and plan to live there for 30 years and pay off their mortgage. Over time, this home did appreciate and it was a great investment for that buyer.
Today’s buyers are different and the world is different. With access to information, technology and the global economy, people are not staying put for as long as they used to. Also, people aren’t marrying and settling down as early and therefore may own one or two homes before settling down.
Real estate was still always meant to be a long-term investment. A generation ago, a homeowner couldn’t follow their Zestimate® home value or check their neighbor’s listings online. There was simply less knowledge and less tracking of your home’s value. If a homeowner looks at their home’s value weekly or monthly, much like stock investments, they will be in for a big surprise. Their home may appreciate a small amount. The value may stay flat for a few years. Or it may even go down.
Counsel buyer clients not to buy a home only because they think it’s a good investment. It’s a home first and an investment second. If the buyer can’t commit to a minimum of five years (seven to 10 is even better), then they may be better off renting until they’re ready to commit.
Excerpt from Zillow Article
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