In the real estate race, the tortoise wins, not the hare, according to the National Association of Realtors consumer study released on November 5, 2010. Homeowners that lived in their homes for a longer period of time made a greater return on their investment. In other words, home buyers should consider it a long term investment, not a quick turn-around. Long term home owners are still gaining equity and are able to trade up.
This year’s home sellers who lived in their homes for 8-15 years saw a median equity gain of 24-40%
For example, home sellers who owned their home for 8 years made a median equity gain of $33,000, which is a 24% increase. Home sellers who lived in their home for 11-15 years made a median gain of 40%. Remember, this is based on sellers that sold their home this year. Despite the price loss over the last few years, home owners that were in their homes for a longer period of time still built equity, still moved up, still made a healthy gain on their property.
The study also shows that both repeat home buyers and first time home buyers intend to stay in their homes for a longer period of time. First timers plan for 10 years; repeat buyers are planning for 15 years. Planning for longer term ownership allows home owners to build equity, and therefore make the expected return on their investment.
Research shows that long term owners sees healthy gain in property value
Researchers for the National Association of Realtors show that real estate can be riskier when real estate is considered a quick investment, like a “fix and flip.” While experienced investors can make money with these endeavors, the rule of thumb is that long term owners see a gain in value. Like in the fable, slow and steady wins the race.
The study was a survey sent to over 100,000 home buyers and sellers that purchased their homes between July 2009 and June 2010.