In the same general rule, homes appreciate four or five percent annually. Some years will be more, others less. The figure varies from one district to another and from region to region.
Five percent may seem like much at first. Stocks (at times) appreciate much more, and is easier to achieve the same performance with a very safe investment in Treasury bills or bonds.
Presumably, if you bought a $ 200,000 home, you will not pay cash for the house. Do you have a mortgage, too. Suppose you put as much as twenty percent at A, would be an investment of $ 40,000.
At the rate of appreciation of 5% per year, a house of $ 200,000 increased $ 10,000 during the first year. That means you earned $ 10,000 with an investment of $ 40,000. Its annual “return on investment” would be a huge twenty-five per cent.
Of course, making mortgage payments and paying property taxes, with a couple of other costs. However, since mortgage interest and property taxes are tax deductible, the government is essentially subsidizing your home purchase.
Your rate of return when buying a home is higher than most any other investment you can make.