Whether you see the housing market "glass" as half-empty or you see it as half-full, industry experts agree that homeownership is still one of the safest, most secure ways to build long-term wealth. On a national level, home appreciation has historically increased 5% to 6% annually, according to economists at the National Association of Home Builders (NAHB).

Doesn't sound like much? Consider the return on your original investment, not the home price alone. Here's an example that puts it into perspective: Let's say you make a 10% down payment on a $200,000 home (an investment of $20,000). At a 5% annual appreciation rate, your $200,000 home would increase in value $10,000 during the first year. Earning $10,000 on an investment of $20,000 is an extraordinary 50% return. In contrast, notes the NAHB, putting that $20,000 down payment into the stock market and getting a 5% gain would only yield a $1,000 profit.

Figures provided by the National Association of REALTORS¨ (NAR) back up NAHB's findings: The national median price of homes bought 10 years ago has increased 88%. The number of U.S. households is expected to increase 15% during the next decade, creating a continued high demand for housing. That makes a powerful case for buying now.

TAX TIPS

Kids May Need Help With Home Purchase

As lending guidelines tighten and home prices ease, more young adults may need help from parents, grandparents or relatives to assemble enough cash for the down payment and closing costs on a home purchase. If you’re willing to help, be aware of some significant tax breaks.

The IRS says any taxpayer (you) can give up to $12,000 per year to any other taxpayer (your child), and the recipient won’t have to pay the federal gift tax on the amount. Another taxpayer (your spouse) can also give $12,000. In addition, if the recipient is married, you and your spouse can each give $12,000 to that person with no tax obligation. Bottom Line: That means two parents can give a married couple up to $48,000 per year ($12,000 x 4 gifts) before the gift tax kicks in. That would equal a 20% down payment on a $240,000 property. The gifts can also be repeated the next year, say, in December and January, to multiply the available tax-free down payment.

If you choose to help your child, his or her lender will ask for a gift letter from you verifying that the amount is, in fact, a gift—not a loan that you expect to be repaid. (A loan reduces the ability of the borrower to qualify for a mortgage loan and other payments.)