Buying a home should be the largest wealth creator for people young and old. Many people rightly believe that having a home is their financial leverage and something that they can enjoy at the same time. The American dream is having a home of their own. Many Americans are trying to keep a dream alive today in what they think is an unfortunate real estate market. However, just checking a few facts will bring the reality of the financial decision into focus.

Real estate has consistently shown appreciation. Real estate has generally appreciated about 5% a year overall. Having 10% down on a $200,000 house is an investment of $20,000. That house would increase about $10,000 for the first year. Earning $10,000 on an investment of $20,000 is equivalent to 50% earnings which would be very hard to do in the stock market. If you put $20,000 into the stock market and got a 5% gain, you would receive a $1,000 profit. Clearly, real estate lets you come out ahead.

If you look at it over a longer period of time, say you put $10,000 into the stock market in 1996 and the average S & P return would make that investment worth about $21,500 today which is an increase of $11,500. The median home price in 1996 was $140,000 and today that same house would have gained nearly $100,000 in value. Real estate again shows itself to be a substantial investment method to riches.

Home values tend to increase at a steady pace and can be less volatile as stocks can be up and down. There has never been a time when housing has not come back up from the down turn in values. The reason is Americans have the belief system and the desire to own their own home and will sacrifice and make it happen and thus keep fueling the market.

Taxes are another reason why real estate helps anyone to develop financial security. Homeowners save nearly $100 billion annually on mortgage interest and property deductions. In most instances, the interest and property taxes can be reduced from the homeowner's gross income to reduce taxable income. In the early years, this is substantial since most of the payment is interest.

When a homeowner sells their home, they also save if they have lived in their home for at least two years. A couple can save $500,000 of the profit tax-free and a single homeowner can save $250,000. Each group can invest in a new and bigger home and receive the same tax break when they sell that home.

There is no reason to fear home ownership in the market that is today's what with foreclosures, etc. Simply look for the type and payment that you can afford and resist the temptation to use your home for a "bank" when you need money as in an equity line of credit. The home will be your best asset in your financial portfolio and will continue to make you feel warm and secure in your financial future for many years to come.