Homeowning Benefits

Today, there's No Place Like Home -- for Living and Investing 

For most American households, the owners' residence is their largest physical and financial asset. According to US Census Bureau data , the median price of homes sold rose 55% from 2010 to 2020. The Federal Housing Finance Board shows a slightly higher 10-yr gain of 59%, graphed below. 

What goes into that value increase? About 16% of this can be attributed to inflation, based on the Consumer Price Index. Another 15% to 20% can be attributed to an increase in the average size of homes sold, derived from trends seen by the Census Bureau between 2010 and 2015. That leaves a 20% to 25% 10-year gain related to asset appreciation. Experts say some of this can be attributed to historically low interest rates that allow homeowners to buy more house for the same payment. The rest hinges on Americans' commitment to home ownership, rising from a 30-year low of 63.7% in 2016 to 65.8% in 2020; COVID-19 quarantines added focus to the homes where we were spending more time than ever. Growing demand results in the low inventory levels that realtors complain of across the country.

Rates are on the rise . The rate jump reflects higher inflation expectations - and real estate will absorb that. Asset appreciation trends are the most uncertain future factor. A comparison of FHFA's 7.8% appreciation rate from 10/19 through 9/20 (see graph above) and Zillow's estimate of 6.1% for all of 2020 shows how measures of these gains vary, but promising near-term trends are good news for 2021.

While demand stays strong, enjoy the living space your home provides along with the equity gains earned in seller-friendly market conditions. 

Note: The image above is from the cited Zillow article.