What you need to know about appreciation, depreciation, and deceleration.
There are a lot of confusing terms floating around the housing market right now, like appreciation, depreciation, and deceleration. What do these terms mean, and which ones are relevant to our current market? To clear up the confusion, I’ll explain each of these terms and how they relate to what’s happening right now in our housing market.
You can listen to my full explanation in the video above or skip to each topic using the timestamps provided:
0:00 — Introducing today’s topic
1:04 — What is appreciation?
1:28 — What is deceleration?
2:15 — Our market is not depreciating; it’s decelerating
2:46 — Home prices are still going up 10% to 11% on average
3:39 — Our market still has a long way to change
4:28 — Phoenix is the third least likely market to experience a housing recession in the U.S.
5:00 — Wrapping up today’s topic
If you have questions about this or anything else related to real estate, please call or email me. I am always willing to help!
The difference in your net worth if you buy a home instead of renting.
What is the difference between the net worth of a homeowner and that of a renter? This is going to be shocking, guys. The average net worth of a homeowner in America at the end of 2021 was about $300,000, and the average net worth of a renter was $8,000. The number for a homeowner is 40 times bigger.
That is why the No. 1 most important thing you can do to increase your net worth is to buy at home. I didn’t say 10 or 20 homes. Just get started, and buy just one home. Over time you will have this beautiful thing called principal buydown, and you’ll benefit from the appreciation of your asset if you give it long enough. Prices fluctuate, of course, so get in for the long-term play. You have to live somewhere anyway.
“You’re paying a 100% interest rate if you rent instead of buy.”
The argument comes when people don’t want to pay a 6% or 8% interest rate when it was 4.5% months ago. However, no one ever got rich because they got a one percentage point savings on their mortgage. Plus, you can refinance sometime in the future when the terms are maybe more favorable. The reality is if you’re paying 6% on your mortgage or a house you own, what is the interest rate you’re paying if you rent your house? The answer is 100% because you are not building anything for yourself over time.
That’s why you should get out of the rental market. We highly suggest you consider purchasing a property for yourself to live in. Then consider other properties to build a rental portfolio—I am big on that because I think it’s a phenomenal way to invest money.
If you have more questions about building a real estate rental or investment portfolio, I would love to chat with you about that because I have one myself and I’m very passionate about it. Give me a call anytime. I’d love to talk.