Over time, homeownership can build wealth. According to the most recently available figures from the Federal Reserve, the median net worth for homeowners was 46 times the median net worth for renters: $184,400 vs. $4,000. Homeownership is a powerful contributor to the difference.
Within limits, homeowners can deduct mortgage interest, mortgage insurance, and property taxes. When you sell the home, there may be a capital gains tax exemption available for primary residences. Check with a tax professional to see how these benefits may apply to you.
While home prices have seen recent declines in some areas, home prices generally appreciate, or rise, over time. Historically, most homeowners who own their property as a long term investment have seen the value of their investment increase.
A home's value reflects local conditions, so instead of worrying about national averages, consider the prospects for economic growth, housing supply, and housing demand in your local area. Talk with real estate professionals in your community to get an assessment of local conditions.
Naturally, you'd like to buy a home when prices are at their lowest point, and then sell it years later, just as home values and prices reach some peak. But don't count on it. Successfully “timing the market” owes much more to luck than to skill. A more sound strategy is to have more time in the market. In other words, if you plan to purchase a home for the long-term, there’s usually a better chance that your investment will increase in value if you buy rather than wait on the sidelines.