Will the housing market rebound?
Historically, it always has and there is every indication it will again. Go back in time and you will find the same doom and gloom predictions for every downturn in the market. Following are a few examples of how the media predicted the future of real estate profits prior to the last real estate boom, investors who didn't listen to these gloomy predictions realized huge profits:
January 2001 - There's some question whether there's a bubble or not a bubble, but we're clearly near the top of the market for much of the nation. According to the Joint Center for Housing Studies, buyers relying on real estate for high returns may be sadly disappointed.
October 2001 - The localities with the greatest likelihood of a significant decline in home prices over the next two years, according to a recent survey by PMI Mortgage Insurance Co., include San Jose and Oakland, Calif.; and Vancouver, Wash., areas; Denver; San Francisco; the Seattle-Bellevue-Everett, Wash., region; South Florida and Phoenix, Ariz. These areas, which were graded as "high risk", are ones that previously experienced strong home-value appreciation.
January 2002 - If you look at the real estate market and see that prices for most of the U.S. are at or near all-time highs - and interest rates are near all-time lows - you have to anticipate a turn - unfortunately the direction is down."
January 2002 - For most, real estate as a lucrative wealth builder is clearly down for the count. The fourth quarter 2001 FHA delinquency rate of 10.97 percent was the second highest for the National Delinquency Survey since 1972.The highest delinquency rate on record for FHA loans, 11.36 percent, was reported in the third quarter of 2001.
The real estate market is a long-term investment that is characterized by peaks and valleys, but over the long term it has consistently gone up since the beginning of time. The saying goes that even if you make a bad investment in real estate, if you just hold it long enough you will still make a decent profit.
For example, even though the media is lamenting the drop in the median home price range, the current $205,000 U.S. median home price is on target to double the average median range of the last decade. This may be a drop for people who purchased at the height of the recent market but it is a considerably large increase for those of us who paid in the low $100s just ten years ago. The key is buying during the low periods and holding on long enough to sell during the peaks. Just taking a look at the United States overall averages for the last seven decades you can see that while there were dramatic low points throughout this time period, overall prices still climbed steadily:
1940-$2,738 1950 -$4,854
1960- $8,900 1970-$17,000
1980-$33,200 1990-$62,100
2000-$109,600 2009-$205,000
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