Based upon current news reports, one would assume that homeowners across the country have lost all their equity. Has that really happened?
Most whose homes are underwater purchased in the last 2 - 5 years, when housing values were reaching their peak. But what about the majority of us who purchased five, ten, fifteen years ago or longer. Are our homes worth less than we paid? No. And it’s a fact few are discussing. They don’t consider it newsworthy.
My own home, for instance, was purchased in 2002. Even though its value has declined from what it was eighteen months ago, I’ve still experienced an increase in value of between FIFTY and SIXTY percent! And the total picture is much better.
Homes are a leveraged purchase; the majority of the funds used are other people’s money. If you calculate my potential profit based upon my cash investment only, the amount of my down payment, I’ve received an ROI of at least 200%! And it could be as high as 300%, as my calculations were very conservative.
So, what’s the bottom line? Houses can be a great long-term investment, especially when you consider the small amount invested; and there are great values out there today. Shrewd purchasers are buying homes now, which during the next ten years, will increase in value more than many other investments. And, homes purchased as a primary residence, offer benefits that no other form of investment can match. Let’s keep the facts in perspective.
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