Housing still a good investment — over time
Homeowners have lost a ton of money in housing equity since the nation’s residential real estate boom in late 2006 began steadily turning into a housing slump. But if you look at housing values for a longer period of time, you’ll see that the vast majority of homeowners in this country have actually seen their residences appreciate in value, even with the housing slump factored in.
That’s why housing, for my money, still remains the safest, soundest long-term investment that a person can make. The key to the sentence, of course, is “long-term.” A house is not, despite what people might have thought during the housing boom of 2001 through 2006, a way to make fast cash.
National real estate writer Kenneth Harney wrote earlier this week that homeowners in the vast majority of markets across the country have seen the value of their homes increase significantly during the last five years. This news is often lost amid the justified doom and gloom of today’s housing market. But it is important to note that housing is still a wonderful long-term investment.
According to a third-quarter survey released by the Federal Housing Finance Board, 273 out of 292 metropolitan markets showed positive net home values during the last five years. Only 19 metropolitan markets showed negative home values during the same period.
As Harney notes, though, this is probably little comfort to anyone who bought homes near the very end of the housing boom. It’s likely that many of these folks, depending on where they live, now owe more on their home than what is is now worth. That’s called “being underwater,” and no one’s happy to be in that situation. I understand the pain of anyone facing this. My wife and I did buy near the tail end of the housing boom. We love our house — though we could live without the slow-draining kitchen pipes that we’re paying to have ripped out later this week — and our neighborhood. But we both know, though we haven’t bothered with an appraiser, that we could never sell our house today for the price we paid for it just two-and-a-half years ago.
Thing is, we’re not that worried. The reason? Because of the numbers that Harney points out in his column. We don’t plan on selling anytime soon. We’re staying put. And once we do sell, the odds are good that the housing market will have straightened itself out and our home will be worth more than what we paid for it. We won’t get rich by selling our house, but we will make a profit.
So remember next time you’re fretting about how much your house is worth today that it really doesn’t matter until it’s time to sell. That house is providing a roof over your head, giving you a place to watch your family grow. That’s its job now. And if you hang on to it for long enough, it’ll make you money, too.
