Purchasing a home is probably the single largest investment an individual may make in his or her lifetime. Your home investment may also be the best investment you make. According to the Federal Reserve, the home you own is not only a place to live, but is also a virtually risk-free investment offering a relatively stable and reliable return on your money, compared to the more volatile returns available in alternative investments such as stocks. According to the Federal Reserve, home owners who sold their homes in the last five years averaged a net capital gain of more than $25,000 in the last five years. Financial experts generally agree that stability of value and tax benefits are two major advantages to investing in a home. Since the major housing organizations began tracking home sales prices in the 1960s, there has never been a year in which the average existing U.S. home lost value, as home prices have increased at an average rate of about 5 percent annually. In fact, the U.S. Census Bureau reports the median price for a home in the United States today is $151,000-up 30 percent from five years ago. It is not surprising that existing home sales are heading for a third straight record year, thanks in large part to rock-solid home prices and record low mortgage rates.
A home owner can further ensure the continued value of his or her home by making home improvements. The American Homeowners Foundation has pointed out that home improvement has become an increasingly popular method of enhancing the value of a home. In the mid 1980s remodeling surpassed new home construction in terms of annual expenditures, and it still leads today. Many home owners have used the equity in their homes to finance improvements by making use of home equity loans. Whether a home owner makes improvements or not, a home continues to a sound investment vehicle as well as a place to live.
