Residents all across the United States are nervous about the biggest investment they have likely made: their homes. Crises being witnessed in mortgage foreclosures and loan modification scams are making some Indiana residents nervous about owning a home in general.
Some Indianapolis first-time homeowners are still braving the climate and searching for Indianapolis homes for sale, especially due to the $8000 First-time Home Buyer Tax Credit. Others are being scared out of the market right now. A normally daunting experience, embarking on owning a home is even more overwhelming due to our current Indianapolis real estate climate.
However, the general consensus is that for all of the intimidating issues facing the current Indiana housing market, home ownership remains a good investment.
With the current threat of foreclosure facing up to over 15 million homeowners who are upside down on their mortgages, insisting that home ownership remains a good investment could be a tough sell. However, history supports that owning a home is still a fairly safe risk.
Since World War II, homes have seen appreciated 4 percent per year on average. They hedge against inflation and offer important tax benefits. Home ownership remains a good investment because a mere ten percent down payment can produce a return of 1000 percent if the value in your home even doubled.
Then there are the fringe benefits of owning a home like the pride of ownership, the community and security. What other investment can you literally call home as well?
While history and facts look good on paper, they can’t write checks for those struggling to pay their mortgage who might argue against that buying a home was the right thing for them to do. It is true that you are more likely to get burned if you buy and sell often or have bad timing and then have to move quickly. There will always be stories where people get burned on a bad real estate deal.
However, if you can commit to owning your home for ten years or more, you will likely see an appreciation on your home that rides the roller coaster of an economic climate.
However, Americans have been on quite a roller coaster since 2006. The United States has witnessed many ups and downs since it started widely offering 30-year mortgages post World War II, but the decline we are in rivals any tough time we have witnessed. Across the country, values of homes are down nearly a 30 percent average.
With this 30 percent decline, experts do caution against some potential risks. Any fall can then witness a few years of prices that remain flat.
Again, one key is remaining in your home long enough to see the appreciation. A good example of the length of time necessary to see a gain is reflected in the end of a housing windfall that occurred around 1990 when we experienced a recession. The country did not see prices increase nationwide for almost seven years in 1997. It remains prudent to be cautious about when you buy and when you think you may need to sell.
In addition, there are costs involved in buying and selling a home that you wouldn’t want to incur every few years including inspections, commissions, closing fees, etc. While there certainly are tax breaks and intangible fringe benefits, home ownership remains an investment that requires a certain amount of maturity and reliability.
In the end, it appears that home ownership will remain a solid choice for investing for years to come. There are some good deals in the market because of our climate that an Indianapolis REALTOR® can help you find.