You’d Be Rich If You Bought a Home Here 20 Years Ago, Study Finds

You'll wish you had a time machine after seeing this list.

For most people, buying real estate is about getting a home. When you buy a house, you might not be thinking of it as an investment — you consider it a place where you and your family can live. But your property is an investment, and buying in the right area can ultimately grow the money you spent faster than stocks or bonds.

That’s why a recent GOBankingRates study took a look at which cities offered some of the biggest returns on homeownership over the last 20 years. The study ultimately identified 25 cities where you would not only make serious money from selling your home, but you could also expect a healthy return from rental income as well.

The study considered median home values in 1998 compared to today for all homes and single-family homes, as well as the average rental income over the last five years to get a better sense of which markets have been the most lucrative for investment properties over the last two decades.

The results showed that, depending on where you live, your house might very well have been the best investment you made over the course of your life. For example, if you lived in the same house for 20 years in Encinitas, Calif., and then sold it, you could be a millionaire by now.

In fact, when you consider that the return on the S&P 500 over the same period was just over 265 percent, the housing market in these 25 cities makes it clear just how important your real estate decisions can be for your nest egg.

Best Cities to Own a Home in the U.S. 20 Years Ago

Of the 25 cities listed here, 20 offered a better return on investment than the stock market over the same period. Just Barnegat Light, N.J.; Kailua, Hawaii; Holmes Beach, Fla.; Lake Forest, Calif.; and Coral Gables, Fla., fell short of the S&P 500 index. And even those five cities didn’t miss by much, with each offering an average return of over 10 percent a year.

And for those people who purchased with plans to rent the property out, the outcomes are even better. Considering that 10 of the cities in the study also offered more than $40,000 a year in rental income over the last half-decade, the total return on owning a home purely as an investment is considerable. At that rate, many of these cities could possibly produce over three-quarters of a million dollars in rental income over that 20-year period in addition to the considerable sum netted from the sales price — that’s money that could also be invested during that time to improve returns even more.

Here’s how rich you could be had you bought a home in these 25 cities 20 years ago:

CityStateMetroMoney Earned by Selling Home at Current List PriceMoney Earned from 5-Years Rental Income
Anna MariaFLNorth Port-Sarasota-Bradenton$866,800$284,807
Barnegat LightNJNew York$542,000$190,084
BellevueWASeattle$685,600$168,382
BerkeleyCASan Francisco$720,300$204,662
BurbankCALos Angeles-Long Beach-Anaheim$589,100$176,124
Coral GablesFLMiami-Fort Lauderdale$652,900$270,784
Culver CityCALos Angeles-Long Beach-Anaheim$676,100$222,027
East Palo AltoCASan Francisco$770,300$186,432
El SegundoCALos Angeles-Long Beach-Anaheim$967,100$237,422
EncinitasCASan Diego$1,121,600$219,246
FremontCASan Francisco$699,100$179,367
HobokenNJNew York$662,000$164,997
Holmes BeachFLNorth Port-Sarasota-Bradenton$523,300$240,207
KailuaHIUrban Honolulu$785,900$184,539
Lake ForestCALos Angeles-Long Beach-Anaheim$534,879$308,078
MilpitasCASan Jose$747,800$185,746
OaklandCASan Francisco$442,700$155,402
San FranciscoCASan Francisco$884,000$236,408
San JoseCASan Jose$707,500$189,890
Santa ClaraCASan Jose$804,900$198,744
SeattleWASeattle$515,300$145,086
SomervilleMABoston$557,100$156,537
SurfsideFLMiami-Fort Lauderdale$637,200$203,105
WeehawkenNJNew York$626,800$152,288
West HollywoodCALos Angeles-Long Beach-Anaheim$921,800$240,742

Keep reading to see the ideal salary you need to afford a home in your state.

Methodology: GOBankingRates generated the list of cities based on the following parameters: 1) Median home value 20 years ago, sourced from Zillow’s January 1998 data. This was found for two classes of homes: All Homes and Single-Family Residences; 2) Median home value today, sourced from Zillow’s January 2018 data. This was found for two classes of homes: All Homes and Single-Family Residences; 3) 20-year change in home values in terms of both absolute dollar amount and percentage for all cities Zillow had available data for. This was found for two classes of homes: All Homes and Single-Family Residences; 4) Median monthly rent, sourced from Zillow’s January 2018 data, was used to determine approximate income a homeowner would earn for the five-year period from January 2013 to January 2018; and 5) Median listing price or median sales price, depending on availability, sourced from Zillow’s January 2018 data. This study assumes the homebuyer has paid off owning the home since 1998.