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Your home is almost certainly the most financially rewarding purchase decision you've made. Owning a home can provide financial benefits that far exceed most other investments, particularly when considering the all important risk factor. Home ownership provides benefits in appreciated value and protects you from the ravages of inflation.
Recently home prices have not increased at the same rate as the late 70's or early 80's which were often in excess of 10% per year. However, there is no doubt that home values continue to increase. A home purchased this year for $100,000 would climb in value to over $160,000 in ten years assuming average appreciation of 5%!! Assuming the same home was financed at 9% (fixed rate conventional loans at this writing are less than 9%) on a $80,000 loan for 30 years, principle and interest payments would be $643 per month. After ten years the loan balance would be approximately $71,500. Assuming again that the appreciated value at $160,000, you would have accumulated approximately $70,000 in equity in ten years!!
Let's consider inflation. You don't hear as much about inflation as you have in the past, but it continues to exist and continues to erode our purchasing power. The only viable alternative to owning a home is renting. A home rented for the same $643 per month (the same as our house payment example above) would rent for one thousand dollars per month ten years from now if rent rates increase by an inflation rate of 5% per year. Ten years of rent paid equal a tad over $97,000 or over $19,000 more than the monthly payments made by the homeowner. The difference is as a renter you'd have zero equity. As a homeowner you'd have accumulated over $90,000 in equity in the same amount of time. If we add the $19,000 extra paid by the renter, the homeowner would be approximately $120,000 ahead of the renter. Calculated as a return on a $20,000 investment (the homeowner's original down payment), the homeowner receives approximately a 17% annual return!!!!! Another benefit of home ownership is the ability to live in your investment. No other investment I'm aware of has the same measure of comfort known as HOME.
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