Home price appreciation has been a hot topic in recent years. If you’re already a homeowner, you likely see price appreciation as a good thing; if you’re a potential buyer, you might have a more negative view on the topic. It’s never too late to start benefiting from real estate appreciation, though!
Here’s how you can use past, present, and future home price appreciation to your benefit:
Past price appreciation:
If you’ve been a homeowner for a while already, you have the option of cashing in on the appreciation that you’ve already gained.
According to Dr. Frank Nothaft, Chief Economist at CoreLogic, “Home prices rose 18% during 2021 in the CoreLogic Home Price Index, the largest annual gain recorded in its 45-year history, generating a big increase in home equity wealth.” This boost in equity gives homeowners options; some people who want to downsize, for example, may be able to do so and still have a nice reserve of cash left over. If this sounds like you but you’re wondering, “but who will buy my home?” then be sure to read on.
Present price appreciation:
If you’re not already a homeowner but working on becoming one, you’re probably wondering if you should continue down that path or if it makes more sense to wait, considering the situation we’re in with inflation. While the answer depends on your situation, you should know that if you want to start benefiting from appreciation, there’s no time like the present.
Here’s why: during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. As soon as you buy a home, though, homeownership starts shielding you from inflation.
This is because buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years.
James Royal, Senior Wealth Management Reporter at Bankrate, says: “A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.” As soon as you lock in your payment, you start benefiting from home price appreciation.
Future price appreciation:
If you want to plan for a successful future, utilizing home price appreciation is the way to go. When you put your money into real estate and build up equity, you’re building up your future. A few years down the road, your home will be a very valuable asset from which you can pull cash to fund big life events, like weddings, surgeries, or vacations. Building up equity opens more possibilities.
While it’s true rising mortgage rates and home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win. Buying now lets you lock in at today’s rates and prices before both climb higher, and it lets you start building equity right away.
Real estate is an asset that traditionally holds or grows in value, so homeownership is a strong hedge against inflation not just with monthly payments but also for your overall wealth.
The Bottom Line and One Catch
Real estate is a solid investment. If you play your cards right, you can benefit from past, present, and future home price appreciation. Home prices tend to rise over time and that should help grow your equity and net worth.
Now the catch.
Everything we’ve talked about depends on the condition of your home. To lock in the maximum value and utilize any equity, you’ll likely have to sell the property. If that property isn’t move-in ready or needs repairs, you could quickly eat into your profits and not get a return on the investment needed to put the house on the market.
So, if you want to invest in a new home but are still wondering “who will buy my home without me having to spend any money?” then we’d love to help you out.
Work With MarketPro
Whether you’re looking to downsize or upgrade your home, MarketPro Homebuyers will give you a fast cash offer for your current home just as it is now; no repairs, no inspection, no commissions or fees. You can even choose your exact closing date to coordinate perfectly with the purchase of your new home. Our team will walk you through your quote, including a review of what your home would likely bring on the open market. Sell the easy way so you can benefit from home price appreciation now and in the future!
If you’re in Washington, D.C., Maryland, Virginia, or Pennsylvania, we’d love to show you how easy and stress-free the sales process can be. Buy my home today!