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.
Mitch Mitchell is a consultant who writes and participates in many different fields, including real estate finance issues. 
We took advantage of the falling home prices when last year we bought our home. But we also strongly believe in investing in a home is a good investment and sooner or later prices for homes will increase again.
You were true about falling house prices. For now, with the ongoing recession, it is practical to be that way. However, this will not be permanent.
Looking back I never thought of my house as an investment – it certainly wasn’t why I was obsessed with buying one. It was simply a matter of loving houses and wanting one of my own. Home ownership has all sorts of benefits aside from the investment aspect. Hang onto it long enough or just happen to ride the real estate wave during the right time period and it’s also a great investment. Meantime it should be a place where you love to live.
Liz
.-= Liz@Cambridge Homes´s last blog ..Concrete Buildings In Cambridge =-.
Buying a home is a good investment over a long time. The problem is them who buy house as a investment on speculation and try to press up the prices and that happen in the beginning of 2000 to 2004.
Having moved from Arizona in recent years, I can tell you how frustrating it was for me personally to buy a home, spend a small fortune on remodeling, and then have to sell it in 2008. We took a beating. If I hadn’t done most of the work myself, we would have lost tens of thousands of dollars.
I agree that real estate is almost always a good investment, but when it comes to your home, make sure you’ll get personal enjoyment out of your investment. Don’t treat it just like an investment property.
(Cool image for the post, by the way)
.-= James@windshield appointment´s last blog ..Revamped Washington, DC auto glass page =-.
Let’s just wait for the time that home price will increase after some quite time. The ongoing recession has its end, but for the meantime, let’s stick on the trends which can make real estate stable and developing. In that case, at least we’re growing. Patience is a virtue. Sooner or later, prices of homes will increase and that’s the time we can go straight up in the market.
.-= Realhomesestate´s last blog ..California Home Sales increased by 16.7% =-.
Good post. Supply and demand. In 2003 thru 2006 there were more buyers than inventory. Those loan qualifications don’t exist anymore so we have a smaller pool of buyers. It’s an incredible opportunity for those positioned to take advantage. Home values will increase, they always do.