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A Rose by Any Other Name . . .

By Bonnie Erickson

Real Estate Agent with Tangletown Realty

September 05, 2006 03:04 PM

Did you hear the news? The second quarter appreciation rate declined from 3.65% in 2005 to 1.17% in 2006. The annualized appreciation figures are worse: 14.62% in 2005 to 4.68% in 2006! This is the sharpest decline since 1975 when the Office of Federal Housing Enterprise Oversight first started their House Price Indexing. No wonder we're feeling the pinch. These are national figures so some areas are better and others are worse. Call it returning to normal, a buyer's market, the market righting itself, the balloon deflating. A rose by any other name is still a rose!

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

I follow appreciation rates VERY carefully for my market area which is Most of Maryland and all of Northern Virginia. In fact, I've been posting them on my main web site, http://www.homefinders.com since March 1994.

Some of my market area is holding. Not going crazy like the past few years, but holding

I'm preparing a graph to show annual and 5 year property value growth across the country to show home buyers that, even with slow appreciation, the home is still the best investment most families can make. While a 2.5% appreciation doesn't sound like much and it wouldn't be on #40,000 worth of stock, when it is on real estate valued at $250K or $500K, 2.5% a year is significant money. The tax deduction is worth a lot too.

Mmmm. I need to figure out how to put that in a graph.

Sep 10, 2006 04:51 AM

Bonnie Erickson

Tangletown Realty - Saint Paul, MN

If one factors in all the variables in home ownership, there actually is more than 2.5% made each year. Consider that one has to pay to live somewhere. If the mortgage expense were going to rent instead of one's own mortgage, that would be a loss each month of $XX. Rent money is never recaptured, whereas mortgage money increases the equity in the home. Homesteads cannot claim depreciation benefits in taxes but mortgage interest is currently a deduction.

Sep 11, 2006 04:31 AM