Source for that? Over how long a period of time? In which market? For which type of houses--tract, or custom?
I don't disagree that a home is a great investment, but 17% is stretching it. Not everyone is going to realize that kind of appreciation. Besides, it's better to diversify IMO, and have some savings in equity investments too.
National average. Two years ago. Would have to look up the source.
Yes. Homeowners usually have some equity in their homes.
At least they haven't been turning their paychecks over to their landlords.
i'm in a small town, in central MI, watching my house appreciate at 8% every 6 months.
Keep in mind that if you put down 20% on your house, you can consider that your "investment", and housing prices going up X% means that your investment is actually up 5X%. You can adjust that for rental price vs. owning price, which used to be pretty comparable, cost of an equity loan, etc.
But yeah 17% rises on the house price itself is done for a long time. (I myself anticipate that April 2006 will show the first year-over-year declines in the National Median Existing Home Price published by the NAR -- which will wreck their chant that national housing prices have never gone down on a yearly basis. National Median New Home Prices were YOY negative this past month BTW.)
Home ownership is a leveraged investment for most people. A lot of people only put 10% or less down these days. So taking payments out of the equation to make it simple (you either pay rent or pay a mortgage), a 1% increase in the price of the home is like a 10% rate of return on their downpayment. Problem with leverage however, is a 1% decline takes away just as quickly. And since transaction costs can run up to 7% to buy or even more to sell, even a property increasing in value will take several years to break even on. Things have been bad here in Michigan for sellers. I see a lot of them bringing money to closings instead of recieving a check, or at the very least thinking they have more equity than they really do. Don't use your house as an ATM!