I think there is a BIG surprise awaiting folks when it comes to rising property values...and it s right around the corner!
Property values and appreciation are going to escalate again...just like they used to!
Really...I'm not kidding, I'm serious as a heart attack.
If you are a real estate speculator looking for a quick red hot investment...this might be a bit disappointing.
But...if you are a home buyer, from planet earth, this is good news that brings a bit of stability back into the world of home ownership...stability AND sound, reliable property appreciation!
Remember what it was like when you could buy a home, and then it was valued at $50,000 (Or more) than you paid for it six months earlier?
Those were the days...right?
I have good news for the real estate industry. We'll never see that type of artificial property appreciation again...because it truly was artificial.
So...why would I say that very soon property values will rise again like they used to?
Because THAT is exactly what we are going to see in the tomorrows that follow these current, yet extremely volatile, real estate market conditions.
Real estate appreciation will begin to appreciate the way it did a few decades ago, back in the 1960's and 1970's, when life was more realistic and when folks bought a home to live in, not a home strictly as an investment tool. I often wonder exactly when it was when our homes morphed into investments tools, rather than simply being a home.
Back in the 1960's, you could buy an average home for about $18,000. You might live in it for ten years, paint and carpet it, plant a few trees and add some wallpaper in the bathroom for an added decorator touch...and then, by the time the 1970's rolled around and your family had outgrown your original home, you might be VERY LUCKY to sell it for $20,000! An appreciation of a whopping $2,000 after all those years of mortgage payments, taxes and improvements. That was approximately a 1% per year property value increase over a ten year period of time...it seemed like a LOT of money back then...in fact, it very nearly felt morally wrong to sell your home for more than you'd paid for it ten years earlier.
AND...you couldn't wait to get that $2,000 check cashed...all the while wondering what sort of dummy would pay $20,000 for a house that you paid just $18,000 for just a decade earlier. You couldn't get old fashioned sayings to quit running through your mind over and over...stuff like..."Boy, there's a sucker born every minute" along with this feeling like you'd just taken advantage of someone, so in between moments of counting all those dollar bills (TWO THOUSAND OF THEM!) you also felt a little bit like you'd done something wrong by selling your home for more than you'd paid for it a decade earlier.
Of course, you moved to a new $26,000 home (Very upscale, almost twice the size) and the seller of your new home probably felt the same way about getting the $26,000 out of you! From zero to sixty you discover you have gone from suckOR to suckER...in they eyes of the sellers of your new home...AND they can't wait to get your check cashed because they think YOU are the real dummy since they'd only paid $24,000 for the house a couple years earlier!
Fast forward ten more years and those young folks that bought your first home for a ridiculously expensive $20,000 (Suckers!) - they just sold the house and moved on...but they sold it for $139,000, and again, that same house sells twenty-five years after that for a whopping $649,000! (You can't help but wonder who THAT sucker must have been?)
Then, last year while visiting friends in the old neighborhood, you drive by the old house to see if it's still the prettiest on the street, it's been added on to and remodeled over the years, but it had this fantastic view of the surrounding community and a pool and the most lovely manicured lawns, you want to drive by it because you feel sort of nostalgic about the "Old" place you'd paid $18,000 for that cozy home back when what now seems to be a million years ago. As you ascend up the hill towards the house, you see a real estate sign in front of the house and your heart begins to race as you pull up to the front of the house to grab a flier from the "Take One" little plastic box. You marvel at the photographs of the remodeled and expanded kitchen (It used to be so small!) and then at the bottom of the page, you see the sad words. BANK OWNED FORECLOSURE!
You can't help but wonder if YOU are the cause of the whole messy thing...all because you'd sold that house for two thousand more than you paid for it. Could it all be my fault?
Friends tell me that the old place finally sold in foreclosure at $404,000...they're still talking about what a good deal the most recent buyers got on purchasing that foreclosed property...the one with the fabulous view, pool AND the newly remodeled and expanded kitchen that didn't even exist back in the 1960's.
We were talking about this the other evening and I'm sure you are all thinking the same thing as I was..."I wonder if I could have held out and got $21,000 for the old place?" Oh...isn't that exactly what you were thinking?
And yet...I digress!
The truth is that we are headed back into the days of property values increasing they way that they used to increase. Slowly and cautiously. We'll never again see the recipe that created this current real estate mess...and that's a good thing. The days of 20-30 percent home appreciation are over, at least in my lifetime...and in your lifetime too! Once the real estate economy has recovered to a point of stability, we'll again see the appropriate property value increases of 1-3 percent per year. That's what is realistic in the real world...it was a GOOD thing back in the 1960's and 1970's, nobody was complaining...including those who made the whopping $2,000 after owning a home for ten years...it was a windfall I tell you!
Property values WILL rise again...JUST like they used to!
Carol...still...wondering...what if I had held out for $21,000?
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