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Buying a home is 'one of the surest ways to accumulate' wealth, says expert on the 'semi-rich'

"It's always a good time to invest in an asset, and a home is a good way to do that."

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There are a few expert-recommended ways to build wealth: Focus on long-term investments, diversify your portfolio, budget responsibly.

Another to add that list, potentially: Buy a home, philosopher Matthew Stewart, author of "The 9.9 Percent: The New Aristocracy That Is Entrenching Inequality and Warping Our Culture," told Grow.

Stewart studies a demographic he calls the "semi-rich," or those who exist between the top 0.01% and the bottom 90%. The net worth of that group ranges from about $1.2 million to $20 million per household, Stewart says. Those assets include cash savings and investments, as well as real estate. 

"One of the surest ways to accumulate the wealth that lands in the 9.9% is to have bought housing in the right places," he says.

Homes are more out of reach now than they were a year ago. In September, the median sales price of a home was $352,800, more than 13% higher than it was last year, according to data from the National Association of Realtors. Soaring real estate prices have buyers worried that if home prices dip, they won't be able to recoup what they spent should they sell their house in the future.

Still, many experts agree that a home is a good long-term investment. Here's why.

Homes often appreciate over time

Though prices rise and fall, homes often end up appreciating value in the long term, says Daryl Fairweather, chief economist at Redfin. "Even if the housing market does happen to slow down, in the long run, home prices will go up," she says. "In the last housing crash, home prices did recover. If you're going to be staying in the home for a long time, it's always a good time to invest in an asset, and a home is a good way to do that."

Plus, she says, millennials, the largest generation since the boomers, will be buying even more homes in the coming years: "They are finally entering into homebuying age, so you know there is going to be demand for housing in the future."

Other experts agree. Despite high prices, a home is a reliable long-term investment, says Mark La Spisa a certified financial planner and president of Vermillion Financial. "If you're going to be in it for 30 years, it doesn't matter" how housing prices fluctuate in the short term, he says.

More important than the state of the market is the state of your finances, La Spisa says. Ask yourself, "If I'm not buying a house, what will I do with the money?"

"If you're going to spend it to increase your standard of living, then I see no point in waiting" to purchase a home, he says. If you're going to use the money to build your wealth in a way that makes more sense for you, though, then waiting to buy might make sense.

Low mortgage rates keep costs 'steady and predictable'

Prices are high right now, which does making saving for a down payment that much harder, says Nicole Bachaud, an economist at Zillow. However, mortgage rates are low, and there are clear benefits to that. A 30-year fixed mortgage rate is 2.78% and a 15-year fixed rate is 2.08%, according to the housing site.

"Locking in a low rate on a 30-year fixed mortgage now will keep your monthly payment steady and predictable, outside of property taxes, for 30 years, while rent costs will invariably keep climbing," Bachaud says.

Locking in a low rate on a 30-year fixed mortgage now will keep your monthly payment steady and predictable.
Nicole Bachaud
Zillow Economist

Low mortgage rates mean you're paying less in interest and more toward home equity, says Fairweather. "One of the reasons home equity is really important is because one day when your kids go to college instead of taking out a student loan, you can tap into your home equity," she says.

"Having your home equity stowed away gives you all sorts of possibilities to invest in your future or your children's futures," she adds.

Homebuying is 'based on local economics'

Remember, homebuying looks different depending on your financial situation and what market you want to buy in, La Spisa says. "Real estate is a local decision," he says. "It's based on local economics and the person's individual finance circumstance."

Stewart agrees, pointing out that his data supports the importance of buying in the "right ZIP code." This often means buying in "fast growing cities," he says. These days that can be even harder to do.

Still, there are some markets right now where homes are more affordable, Bachaud says, especially in Southern and Midwestern states. "Places like Augusta, Georgia, Columbia, South Carolina, Indianapolis, and Cincinnati all have typical monthly mortgage payments that cost less than 15% of local homeowners' median income — far below the 30% threshold beyond which housing costs are considered overly burdensome," she says. "And we expect all of those metros to see higher than average appreciation over the next year."

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