Investment Value


Your rate of return when buying a home is higher than almost any other investment you can make. Homes normally appreciate about 5% a year. If you bought a $150,000 house, you probably didn’t pay cash, you got a mortgage, too. Say you put 20% down or $30,000, at an appreciation rate of 5% annually, a $150,000 home would increase in value $7,500 during the first year. That means you earned $7,500 with an investment of $30,000. Your annual "return on investment" would be 25% percent. Not bad for one year.

You mortgage payments and property taxes, along with a couple of other costs help increase the return on your investment. Since the interest on your mortgage and your property taxes are both tax deductible, the government is basically subsidizing your home purchase.

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