With fear-inducing headlines circulating about rising interest rates and a real estate market crash on the horizon, you may be wondering if it's still a good idea to invest in real estate in 2023. While it is true that interest rates are higher now than a couple of years ago when they reached shocking record lows, the predicted market crash that was supposed to happen early this year never did.
Experts agree that real estate remains the best long-term investment, voted #1 for the 11th year in a row according to a Gallup poll. If you are considering buying a home in Carson Valley, it's still a great time to invest. Contact us any time to learn more about homes for sale in Carson Valley, and check out these 3 reasons why buying a home is still a wise long-term investment.
1. Homeownership guards against inflation
When you own a home, you effectively lock in your housing costs for the length of time you live in the home. When you are renting a home, your monthly housing expenses will slowly rise over time as the market grows. This increase is out of your control, leaving you subject to your landlord. You may also find yourself having to downsize or move often to keep your costs at a reasonable point.
As a homeowner, your monthly housing expenses will remain virtually the same year after year. Though your utilities and property taxes may increase over time, the bulk of your monthly housing cost will remain steady. This is a great way to guard yourself against inflation because your wages will likely increase over time while the most significant factor in your cost of living remains the same. This means your home will become increasingly more affordable over time.
2. Owning a home opens up a financial opportunity
Homeownership opens up many opportunities for you financially. As your home builds equity, you can leverage that equity in many ways. Refinancing is one option to cash out some of this equity, reinvesting it to increase the value of your home or using that cash for another financial endeavor.
You can also use your home's equity as a source of credit. By taking out a home equity loan (HEL) or a home equity line of credit (HELOC), you can borrow the money you need at a lower interest rate than a credit card or personal loan.
Another financial opportunity brought to you by homeownership is passive income potential. Owning a home opens up many doors for you to create additional streams of income, including:
- Renting out a part of the home to a roommate to lower your mortgage expenses
- Adding an ADU or garage apartment to a long-term tenant or as a short-term vacation rental
- House hacking, where you live in the home just long enough to use the equity to buy a second home, and then rent out the first home as a source of passive income
3. Building generational wealth is a natural byproduct of homeownership
Many Americans are wondering how they can build a financial future for their children, creating generational wealth they can pass down. Homeownership is one of the best ways to do this. When you own your home, even if you do nothing else to create an inheritance for your children you will have a lucrative asset to pass on to them. Even with dips in the market from time to time, real estate reliably increases in value over the years and will be a valuable gift to pass on to your children if you move into an assisted living facility or when you pass. As you think ahead for the future, homeownership just makes sense.