The other day, I was going into the local supermarket when I met Jane, an old friend and client. She
immediately asked me (as so many do!) "How is the real estate market?" There was genuine alarm
in her voice. I said: "Fine." She looked startled, and unsure. I elaborated: "In some parts of the country,
like Florida, and Nevada, and California, the real estate prices went wild." I didn't shock her with statistics,
but the Florida Association of REALTORS(R) pegs the overall inflation for ALL houses in Florida at 172% for
the time period of 2000 to 2005. But, here in North Central PA, where Jane and I live and work, the
inflation for the same period is much, much smaller. And, the higher they went up, the bigger they
are falling. Our market is steady, and would be better yet if we could convince people to quit listening to
the media. It's almost as if a hurricane is predicted for the Florida Keys, and everyone where I live wants
to board up their windows. Get a grip, folks! Let's talk fundamentals: in some markets, we do have
a tremendous over supply. Not so much in the boondocks of Lycoming County PA, where our builders
never went on a tear, building new houses as fast as they could. Our market is A-F-F-O-R-D-A-B-L-E.
Really, really affordable. Our average sales price is still south of $150,000. That's a mortgage payment
of about $700 to $850, depending upon how much the borrower puts down. We have people who
live here who have very stable jobs. Like Jane, who has worked in the local hospital for over 20 years. Or
the teachers we have, or the college employees and professors, or the Penn Dot workers, or the nurses
or the local plants that are doing quite fine (despite the gloom and doom on the news every night). And
all those people have to have houses to live in. From where I sit, I don't see a risk of our values
decreasing; they seem to be somewhat flat, but they are not going down. And like other markets, they
have steadily increased for the 30+ years I have been in the real estate business. I summarized all that
to Jane, and then asked my favorite question: "If you have owned your home 10 years or more, would
you sell it today for what you paid for it?" I never get any takers on that one. Look at the history;
historically, home prices go up. The other thing is that for so many people, their home ends up
being their forced savings plan. They buy it and make payments, and as long as they don't get stupid
about refinancing it every two years, at some point they own it 'free and clear'. That's a good thing.
This economy will recover, because of or in spite of all the government intervention--and when it does, the
happy folks will be the ones who bought real estate now. The ecstatic people will be the ones who bought
investment property now, and let the tenants pay it off for them. Consider that concept, if you
have been opening the envelopes from the brokerage house or the 401K folks with trepidation
and fear. Real estate is the ONLY investment someone else will buy for you. We call those folks tenants.
And, with the market changing as it has, meaning that Freddie and Fannie have found religion again,
and have decided not to loan money to people without (gasp!) a job, credit and some money, more
than ever, some people will have to rent. If you are in a position to invest, do so, and let those folks
pay off YOUR mortgage.
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