New market down but housing values still way up
The current U.S. real estate market is threatening property values with record sales declines and high interest rates within the past year. But this may be long overdue as statistics have recently shown a drastic increase in home values during the market’s booming years from 2000 to 2005.
Even though the market is feverishly attempting to correct itself, the escalated five-year boom in home values will still leave early bird real estate investors in a fortuitous position.
Lew Sichelman’s article, “House Values Up 32 Percent in Last Five Years,” posted in the October 4, 2006 edition of Realty Times provides the details of this amazing report.
During this slowing market, housing prices are expected to fall, but in the past year there has been only a one to two percent decline throughout the majority of the U.S. and some states, such as Texas, as still appreciating in home values.
Remarkably, the national average of existing single family home values rose 32 percent from 2000 to 2005, while many other areas saw increases three or four times that amount (Las Vegas).
“‘Just about anyone who owns a home or has been in the market for one in the past few years knows first-hand how home values jumped from 2000 to 2005,’ said Census Bureau Director Louis Kincannon.”
Some major U.S. cities experienced these phenomenal value increases. San Diego’s home values absolutely soared during the five-year boom, increasing 127.2 percent from $249,000 to $567,000. Los Angeles and New York also lead the big markets with increases of 110.2 percent and 79.1 percent respectively.
“In the smaller cities with a population of 65,000 or more, the highest percentage increases in real median home values were found in Boynton Beach, Fla. (120.3 percent) and Folsom, Calif. (99.5 percent).”
This house price data has been compiled by the 2005 American Community Survey, which includes other household information such as “occupancy, units in structure, year built, rooms, occupants per room, vehicles available, house heating fuel, value, mortgage status, gross rent, selected monthly owner costs and other characteristics that local policymakers can use to assess their community's housing needs and better plan for schools, roads and other services.”
Prospective buyers, who are worried that they missed their opportunity to cash in, need not worry. After several years of sellers of inflated prices, a buyer’s market is emerging again. Although prices are drastically higher than five years ago, they may also be drastically lower than they will be five years from now, especially when the economy’s job market catches up with inflation.
These statistics just go to show how investing in the real estate market can be more fortuitous than any stock. You just have to be careful to invest at the right time and not get stuck trying to sell expensive properties in a buyer’s market.
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