Is Real Estate Still A Good Investment?

In today’s market of high interest rates and home prices soaring, there is a burning question on many people’s minds. Is home ownership still a good long term investment?  In short, the answer is yes.  There are many different places you can invest your money, but at the end of the day, real estate is still one of the best investments you can make.  Let’s look at a few reasons why:

1. Appreciation. Over time, real estate tends to appreciate, meaning the value of the home increases. Although there might be periods of decline, historically the overall trend is upward. 

2. Leverage. Home ownership is one of the few investments where you can use leverage (borrowed money) to increase your potential return. Even with today’s relatively high interest rates, if your home appreciates at a rate greater than the interest you're paying, you still come out ahead.

3. Building Equity. As you pay down your mortgage, you build equity in your home. This is a form of forced savings, where part of your payment reduces the loan balance, and therefore increases your equity. 

4. Tax Benefits. Home ownership can provide you with actual tax benefits. For example, you can deduct mortgage interest and property taxes from your income, which can help offset taxes owed.

5. Control and Stability. Owning a home gives you a sense of stability and control you don't often get from renting. It’s your home to personalize and you don't need to worry about a landlord increasing rent or selling the property.

6. Inflation Hedge. Real estate is seen as one of the best hedges against inflation. As the general price level rises, so too does the price of homes. But instead of your rent increasing, you payments are locked in.