Reflections on Real Estate Values
As a real estate professional and a home owner, it is clear to me that owning a home is a great investment. The rule of thumb I have used for years is that if you buy what you can afford to hold for 2 to 5 years, you will reap the rewards of home ownership.
In times of economic upheaval, it can be difficult to see, or feel, this. I have been actively involved in real estate since 1974, nearly 30 years. When I began selling real estate, a nice home in our coastal area sold for $25,000 -$30,000.00. There were many times since then that I have heard a potential client voice a fear "real estate prices can never go higher" or "real estate prices are going to fall." It is true in the short term there is flux in real estate prices, and it is true that there are types of property that hold their values better than others. However, the rustic cabins, without perimeter foundations that I sold for $15,000 to $20,000 in 1974-1975 now sell for $300,000-400,000. So even the properties that appeal to a smaller group of potential buyers appreciate over time.
People who felt they paid too much for a property in the late 1980s or early 1990s, when they bought just before the real estate market peaked, now look like they got an incredible buy.
Are part of my reflections the result of aging?! As I write this in March, it is my birthday month and one thing I received is a booklet of things that occurred in my birth year.
Some interesting prices from my birth year are:
- $4,625 for a new house
- $2,390 is the average income
- $1,025 for a new car
- 62 cents for a gallon of milk
- 9 cents for a loaf of bread
I'll let you guess the year. Many things have changed during my lifetime; however, real estate as a good investment is not one of them. In our beautiful California coastal country area, real estate continues to provide shelter, tax breaks, and is a great investment.