Top reasons real estate increases in value

Real estate is probably the single largest investment in the portfolio of every family across the globe. Most middle-class families invest the maximum amount of money in their residential homes.In many parts of the world, this is reinforced by the fact that houses have exponentially risen in value. Stories of 50 times appreciation over a period of 20 years are not uncommon.

However, it is important to note that this is nowhere near an extraordinary rate of return. Even if a property has grown 50 times in 25 years, its annual rate of growth is less than 10 percent. It is lack of literacy about the magical effects of compounding that makes people blindly chase real estate.