Buying Advice

Gains in Housing Wealth

With all the talk of a cooling housing market, you might be surprised to learn that 85 million homeowners saw gains in housing wealth last month. That’s right, 85 million! Wow! According to NAR’s Chief Economist, Lawrence Yun, the average U.S. homeowner with a mortgage has built more than $300,000 in equity since their purchase date. So, if you think purchasing a home is a bad proposition, think again. Owning real estate has long been recognized as one of the most reliable and lucrative ways to build long-term wealth. In fact, the Federal Reserve reports that the net worth of a homeowner is 40 times higher than that of a renter.

Do you want to build wealth? Consider jumping into the real estate market. Mortgage rates have settled into the 6.5% range, which is a full point lower than they were in October. Many buyers are beginning to feel more optimistic about buying due to the downward trend in rates. And, as those same buyers enter the market, there will be more competition. Competition that may push home prices up due to higher demand and limited supply. So, if you’re ready to buy, there may be no time like the present to start shopping. And, even more importantly, there may be no time like now to start building wealth.

Short-Term vs. Long-Term Outlook

Regardless of the short-term outlook of the real estate market, one thing is certain — real estate over time is a good investment. Take a look at the following stats for the island of Oahu:

Between 1985 and 2023, Oahu’s Median Sales Price for a single-family home has gone up a whopping 562%. Whoa! In 1985, the median sales price for a single-family home was just $158,600. And last year? It was $1,050,000. Granted, it took 38 years to appreciate that much, but even in the last decade, the median rose from $650,000 to $1,050.000. If you bought a decade ago, you’re probably not complaining. And, when you combine the other benefits of home ownership, i.e, stability, freedom to make your home your own, tax benefits, etc., buying a home makes sense.

Real estate as investment is a good strategy for building wealth. Period. You can leverage the purchase through financing and pay down the mortgage over time. And, inflation will help your cause because your property value will go up over time. If you don’t believe me, just ask the 85 million homeowners who saw gains in their personal wealth last month. Yep, owning real estate is a reliable and lucrative way to build long-term wealth. Especially.In.Hawaii.

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