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Why Homeownership Wins in the Long Run
Today’s higher mortgage rates, inflationary pressures, and concerns about a potential recession have some people questioning: should I still buy a home this year? While it’s true this year has unique challenges for homebuyers, it’s important to think about the long-term benefits of homeownership when making your decision.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how home values grow with time and how, by extension, that grows your own wealth. That may be why, in a recent Fannie Mae survey, 70% of respondents say they believe buying a home is a safe investment.
Here’s a look at how just the home price appreciation piece can really add up over the years.
Home Price Growth over Time
The map below uses data from the Federal Housing Finance Agency (FHFA) to show just how noteworthy price gains have been over the last five years. And, since home prices vary by area, the map is broken out regionally to help convey larger market trends.
If you look at the percent change in home prices, you can see home prices grew on average by just over 56% nationwide over a five-year period.
Some regions are slightly above or below that average, but overall, home prices gained solid ground in a short time. And if you expand that time frame even more, the benefit of homeownership and the drastic gains homeowners made over the years become even clearer (see map below):
The second map shows, nationwide, home prices appreciated by an average of over 290% over a roughly 30-year span.
This nationwide average tells you the typical homeowner who bought a house 30 years ago saw their home almost triple in value over that time. That’s a key factor in why so many homeowners who bought their homes years ago are still happy with their decision.
And while you may have heard talk in late 2022 that home prices would crash, it didn’t happen. Even though home prices have moderated from the record peak we saw during the ‘unicorn’ years, prices are already rebounding in many areas today. That means, in most markets, your home should grow in value over the next year.
The alternative to buying a home is renting, and rental prices have been climbing for decades. So why rent and deal with annual lease hikes for no long-term financial benefit? Instead, consider buying a home.
Bottom Line
If you’re questioning if it still makes sense to buy a home today, remember the incredible long-term benefits of homeownership. If you’re ready to start the conversation, reach out to a real estate professional today.
How to Make Your Property Appealing to Potential Renters
As an investment property owner, attracting new tenants or vacationers is crucial to maintaining a steady income stream. In a competitive rental market, it’s essential to ensure that your property stands out from others in the area. By following these tips, you can make your property more attractive to prospective renters, thus ensuring your investment is a profitable one.
Start an Airbnb or Long-Term Rental?
One of the first decisions you should make is whether you will offer your property to long- or short-term renters. Starting an airbnb means deciding things like whether you have time and energy to be the host, who will do cleaning when guests leave, and what platform or property manager you’ll use. And while vacation rentals are typically a more lucrative option, they tend to be more work; long-term rentals offer a more steady and predictable income stream.
Some of the long-term rental decisions are essentially the same, but the daily rigamarole is less intense. Weigh your options before deciding what direction fits your situation best.
Check Out the Competition
Knowing your market is key to making solid decisions. This means understanding both your competitors and your customers. Pay attention to area rentals to know what is successful and catching a higher rent, and make note of properties that have a lot of turnover or vacancies. This strategy holds true for both short- and long-term rentals, so whether your goal is to open an airbnb or an apartment complex, be sure to do your research.
Add Fresh Paint
A fresh coat of paint can give any rental property an instant facelift. Consider using neutral colors that appeal to a broad range of renters, such as beige, gray, or light blue. Not only will a fresh coat of paint make your property look more modern and attractive, but it can also help to cover up any scuff marks, scratches, or other signs of wear and tear.
Replace Appliances
If your rental property has outdated appliances, it might be time for an upgrade. Invest in new, energy-efficient appliances that will save money on utility bills. Be sure to advertise the new appliances in your marketing materials as a way to entice prospective renters. Stainless steel appliances are one of the most-desired home features for buyers and tenants.
Install Smart Technology
Smart technology is becoming increasingly popular among renters. Consider installing devices like smart thermostats, door locks, and lighting systems that can be controlled remotely from a smartphone. Not only will these devices make your property more attractive to renters, but they can also help to increase your rental income by allowing you to charge higher rent prices.
Make Energy-Efficient Upgrades
Making energy-efficient upgrades to your rental property is not only good for the environment but can also save your tenants money on their monthly bills. Consider replacing old windows with double-paned, energy-efficient options, installing low-flow showerheads and toilets, and adding insulation to the attic and walls. These upgrades will not only make your property more attractive to eco-conscious renters but can also help to reduce your overall operating costs.
Enhance Outdoor Areas
Don’t forget about the outdoor areas of your rental property. Investing in outdoor upgrades like landscaping, new lighting, and adding seating areas or BBQ pits can make your property more attractive to renters. You might even consider a lux touch like an outdoor kitchen, complete with a stone oven and ventilation system. You’ll find guests like to feel pampered, so glamorous perks can pay off in the long run.
Your outdoor space is an extension of your indoor living spaces and is essential to creating a well-rounded rental experience. Make sure to keep the outdoor spaces clean and tidy and highlight these areas in your marketing materials.
Market Your Property with Customized Brochures
Marketing your rental property to the right audience is key to drawing in new tenants. To reach the maximum number of potential renters, consider creating a useful brochure that highlights the features of your property. You can then distribute these brochures at college campuses, parks, community centers, and other public areas. Be sure to include high-quality photos of the interior and exterior of your property, information on amenities such as laundry facilities, parking options, and pet policies.
By following these tips, you can make your rental property more attractive to prospective tenants, resulting in more interest and higher rental income. Decide if you’ll offer an airbnb or long-term rental, and examine your local competition carefully. Choose the unique features of your property, invest in energy-efficient upgrades, and don’t forget about upgrades to the outdoor areas. With careful planning, you’re sure to see success.
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