One of the most common questions I hear from buyers is: “How much will this home appreciate over the next few years?”
I completely understand the desire to invest wisely. Buying a home is a major financial decision, one of the largest purchases of a lifetime. But in today’s environment, future price predictions have become less about analysis and more about speculation.
We’re living in a time so data rich that predicting outcomes has become commonplace and our ability to forecast the future is almost assumed. With this inflated confidence, it is not surprising that nearly 60 percent of U.S. adults participate in some form of gambling - whether through sports betting, online platforms, or gamified financial markets that blur the line between investing and wagering. We’ve even seen a shift in language, with “Betting” increasingly reframed as “Predicting.”
Real estate, however, is not meant to function that way.
A home is first and foremost an essential need. While there is evidence for it being a sound long term investment, there is stronger evidence that it should not be approached like a short term trade. Could you potentially earn more money investing in stocks? Possibly. But you cannot live in your portfolio.
Over time, housing has proven to be one of the most reliable drivers of wealth. About two-thirds of U.S. household wealth is tied up in home equity. Home values have risen in 78 of the last 83 years. Homeowners today have roughly 44 times the net worth of renters, and over the last five years alone, the median homeowner increased net worth by approximately $150,000. These outcomes were not the result of perfectly timed predictions, but by consistency and long-term ownership.
Historically, over long periods, home values tend to appreciate roughly in line with inflation. That may not sound exciting compared to the extraordinary gains of the past few years, but it reflects a healthy and sustainable market. More importantly, homeownership delivers several tangible benefits that are often overlooked:
Shelter, an essential need that exists whether you own or rent, (with rental costs also often rising alongside inflation!)
A hedge against inflation, as the past decade has clearly shown that generally, owners of hard assets have fared better than those without them.
Equity creation, even in periods of flat appreciation, as owning outright at the end of a mortgage builds meaningful net worth.
Enjoyment per square foot, which matters just as much as price per square foot. A home should enhance your quality of life.
The most successful real estate decisions are rooted in fundamentals, not headlines. Value is often created at the time of purchase by buying in improving neighborhoods, identifying properties with unrealized potential, or renovating homes others may overlook. That is strategy, not speculation.
The past five years were extraordinary, where some homeowners saw outsized gains driven by elevated inflation and unusual migration patterns. It is important to recognize those conditions were the exception, not the rule.
Like disciplined investors in any asset class, the goal is quality at a fair price, not chasing quick wins. Real estate rewards patience, thoughtful analysis, and a long term perspective.
Perhaps we’d all be better served by spending less time trying to predict the next surge and more time investing intentionally in our homes, our neighborhoods, and our lives.
