But take a second look…
Presumably, if you bought a $200,000 house, you did not pay cash for the home. You
got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.
At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000
during the first year. That means you earned $10,000 with an investment of $40,000. Your annual "return on investment" would
be a whopping twenty-five percent.
Of course, you are making mortgage payments and paying property taxes, along with
a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the
government is essentially subsidizing your home purchase.
Your rate of return when buying a home is higher than most any other investment you
could make.
