Homebuyer Tips

Homeownership: Still A Great Way To Build Wealth

Whether you’re a first-time homebuyer or a buyer who’s been around the block more than once, recent real estate news has been sending mixed messages. It’s a sellers’ market, but most people who sell their homes need to buy one. Can they afford it? Rates are rising again after years of historic lows, but they are still considered low enough to be affordable and worth the cost of purchasing a home. However, one perspective has remained steady – homeownership builds wealth. Let’s go over the specifics.

How It Works

Unlike cars, homes appreciate (gain value) both as they age and as homeowners make improvements. A 10-year-old home in which you renovated the kitchen will be worth more than when you bought it, for example.

Your equity (the value of your home minus what you owe on your mortgage) increases over time as well. The more mortgage payments you make, the more of the home you actually own. This means you own more of your home as it appreciates, which translates into a wealth increase.

Who’s Building Wealth?

In short, people just like you. Many middle-class Texas families have watched their wealth rise over the past 10 years.

Middle-class homeowners saw their total real estate wealth skyrocket by $2.1 trillion since 2010. Their houses appreciated by 8.3% from 2011 to 2021. The Austin and Dallas housing markets showed some of the largest middle-class gains at wealth increases of $61,323 and $53,421, respectively.

What Does the Future Hold?

The housing market is always difficult to predict. However, projections show continued home price increases. Fannie Mae thinks home prices will rise 11.2% in 2022, and even “normal” prices will match inflation.

As home values keep climbing, now could be the time to buy and generate wealth for years to come.

Are you investing in a home to grow your wealth? Get pre-qualified with First Bank beforehand to know what you can afford.

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