It once was that common wisdom expounded that real estate was possibly the most trusty investment you could make. "A home will always go up in value" was the common phrase you heard from buddies and family, and even property investors.
You were told that you should generally buy instead of hire a home. Why pay someone else's mortgage when for a similar money you can own your very own home and have a great investment?
Again, that was the common knowledge everyone thought.
Then came the housing collapse of 2007 when many of us lost out and housing values plunged. This frightened many folks out of the real estate market... And the "common knowledge" did not sound so sensible any more.
But what's the truth?
The reality is housing prices and the real-estate market has traditionally been cyclical. Prices went up and on occasion went down. Usually, the long-term trend was always up. Although the costs frequently went up slowly, you could count on them to always go up at some point. This is the way that it was for over eighty years since the Great Depression.
But yes this housing bust was a little different. Between 2000 and 2007 home costs went up more than any other time in the last fourty years. And between 2007 and 2009 they went down faster than at any other time in that fourty years. It was a good example of a boom market going bankrupt. The housing bubble had burst.
Ya hindsight is generally twenty-twenty. If you glance at the housing market over the years like on this website, it virtually appears obvious that something was wrong. There was no good excuse for prices going up that much, that quickly. There should have been stop signs every where.
But no. Everybody assumed it might last for all eternity. That meant not only property investors and householders, but also lending organizations and banks and even Wall Street investors.
People who had never owned a house were inspired to get into the market by lenders who were unscrupulous. Many purchased homes they actually could not afford. Many ended up with loans they couldn't pay when their home values took a nose dive.
And yes, there probably was enough greediness to go around for everybody.
But now the housing market has stabilized (some might say crashed) it's OK to take a big picture view of the situation from 10,000 feet again. If you look at those housing prices over the past 40 years, the present prices are inline with long term trends. In fact , you might even believe that housing costs are extraordinarily low. And mixed with extraordinarily low mortgage interest rates, the common knowledge may again be that real-estate is a great investment.
For those with money to invest there may never be housing costs this low again.
And for first time householders with a little money for a down payment, this is a superb time to get a great deal on a great long-term investment.
And with the foreclosure crisis, you can find short sales in numerous places around the country.
Yes it's safe to go into the water. And though it could be 1 or 2 years before prices start going up again, you can bet on the proven fact that they should. After all , that's what they have been doing for years.
Now if we could just get past this foreclosure crisis. But that's a story for another time.
You were told that you should generally buy instead of hire a home. Why pay someone else's mortgage when for a similar money you can own your very own home and have a great investment?
Again, that was the common knowledge everyone thought.
Then came the housing collapse of 2007 when many of us lost out and housing values plunged. This frightened many folks out of the real estate market... And the "common knowledge" did not sound so sensible any more.
But what's the truth?
The reality is housing prices and the real-estate market has traditionally been cyclical. Prices went up and on occasion went down. Usually, the long-term trend was always up. Although the costs frequently went up slowly, you could count on them to always go up at some point. This is the way that it was for over eighty years since the Great Depression.
But yes this housing bust was a little different. Between 2000 and 2007 home costs went up more than any other time in the last fourty years. And between 2007 and 2009 they went down faster than at any other time in that fourty years. It was a good example of a boom market going bankrupt. The housing bubble had burst.
Ya hindsight is generally twenty-twenty. If you glance at the housing market over the years like on this website, it virtually appears obvious that something was wrong. There was no good excuse for prices going up that much, that quickly. There should have been stop signs every where.
But no. Everybody assumed it might last for all eternity. That meant not only property investors and householders, but also lending organizations and banks and even Wall Street investors.
People who had never owned a house were inspired to get into the market by lenders who were unscrupulous. Many purchased homes they actually could not afford. Many ended up with loans they couldn't pay when their home values took a nose dive.
And yes, there probably was enough greediness to go around for everybody.
But now the housing market has stabilized (some might say crashed) it's OK to take a big picture view of the situation from 10,000 feet again. If you look at those housing prices over the past 40 years, the present prices are inline with long term trends. In fact , you might even believe that housing costs are extraordinarily low. And mixed with extraordinarily low mortgage interest rates, the common knowledge may again be that real-estate is a great investment.
For those with money to invest there may never be housing costs this low again.
And for first time householders with a little money for a down payment, this is a superb time to get a great deal on a great long-term investment.
And with the foreclosure crisis, you can find short sales in numerous places around the country.
Yes it's safe to go into the water. And though it could be 1 or 2 years before prices start going up again, you can bet on the proven fact that they should. After all , that's what they have been doing for years.
Now if we could just get past this foreclosure crisis. But that's a story for another time.
About the Author:
Rick Hart is a web business advisor. He provides tools for short sale lawyers in Tampa that help with loan alterations, short sales negotiations and repossessions.
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