Categories
Home Prices Don’t Always Increase
January 10, 2010 | Gadget
It has always been said that buying real estate was a great way to build up one’s portfolio because, when all is said and done, real estate will always go up.
It seems that wasn’t quite the case in the first decade of the 2000’s. As a matter of fact, according to the National Association of Realtors, home prices overall actually went down 3% in real value, even though the actual price of homes went up from $137,000 to $172,000 in ten years.
All things equal, if this same study had been done in 2006 we’d be here with a much different story than we have now. At that point, home prices were averaging $231,000 and life was looking really good. Then the bubble burst in many areas, and of course in the last two years home prices have drastically fallen because of foreclosures and bad home loans. It’s pretty much taken the recovery we’ve seen over the last six months of 2009 to bring overall home prices back up to where they are now.
One good thing in all of this is that inflation rose faster, so even though the dollar isn’t worth what it was in 1999, the average pay rate for Americans went up, which means that homes are actually more affordable now than they were in 1999. That doesn’t help when one is looking at unemployment figures in double digits on average, but in those states where unemployment is comparatively low, that works in the buyer’s favor.
What’s especially good is that many homes in states like Florida, Arizona, and Nevada are actually being purchased by out of state buyers, who are looking for both nice and inexpensive second homes or planning for their retirement to warmer climates. Also, more single men and women are purchasing homes than couples, as they seem to have more disposable cash.
So, maybe the idea of selling new homes isn’t to tell people that they’re investing in their future in a market that, unfortunately, doesn’t always increase in value. Maybe the idea is to encourage people to buy homes for their future that they will always love instead.
Related posts: