INSIDER: Successfully Owning Real Estate Todaykwilliams
Historically, as well as recently, many buyers and sellers mention how they could have purchased a property for much less, would have bought or sold a property, or should have done at least something. Lamenting missed real estate opportunities should only elevate your level of interest and desire to participate in the current market. Regardless of your real estate past, consider the following tips to make better real estate decisions in today’s advanced real estate market.
Learn from history:
There have been two major recessions that have slowed down the real estate market, both nationally, and in Denver. The first was in the mid-1980s and the last one took place from Q3, 2008, until Q1, 2012. It takes time to adjust to a changing marketplace, so go into the current market thinking long term.
“Buy low and sell high”
We have all heard about the business proverb stating how we should “buy low and sell high,” however the ultimate question becomes, just how do we do that? Typically, market cycles run three to eight years in duration and are not usually as dramatic as the major recessions of the 1980s and 2012. The key to successfully owning real estate is simple; think long-term. We always hear about nice profits being earned by people who are “flipping” property by buying right, fixing up, and then selling within a few months. There is an art to that, and those profits do not come without risk.
Time is our friend!
A little patience will go a long way in helping you increase the value of your financial statement. In the 1980s mortgage interest rates literally ran between 9% and 18% and the level of foreclosures reached an all-time high by 1987 – 1988, when the market bottomed (similar to 2009 – 2010). Within two-to-three years, and throughout the 1990s until 2001, the market went up 150%. The market had started improving by 1990, but most people waited a little longer until their confidence level increased and they began to see others buying and selling homes.
Benefits of home ownership:
As opposed to other investments that tend to fluctuate and carry higher risk, real estate provides the advantage of shelter and enjoyment, a tangible benefit. Over time, and even through two recessions, real estate has provided long-term appreciation at the highest level. For example, in 1983, the average home price in Denver was $78,200. Currently, the average home price for single family homes and condos combined in Denver just broke the $400,000 mark for the first time historically. Likewise, average rents have increased at a very healthy pace from $387/month in 1983, to over $1,700/month today. Real estate appreciation can be counted on in the future.
From approximately 2007 – 2012, many households put their changing needs and desires on the back burner, waiting for a brighter or better market.
If you believe real estate prices and interest rates will not increase, or you are ideally happy with where you currently live, the inherent message of this article can be ignored. However, if you would like a little more financial inspiration, consider the fact that in a thirty-two year period, prices have quintupled, while interest rates are about a third of what they were in the 1980s.
Remember, with long term investments you are paying down the loan a little each month and writing off the interest and taxes as well. Think long term today, and you will be satisfied with your real estate investment in the future.
Whether buying or selling a home, understanding your local market will give you the confidence to move forward. LIV Sotheby’s International Realty compiles monthly, quarterly and year-end reports to help consumers make better real estate decisions. To access current market reports visit www.coloradomarketreports.com. To service all of your real estate needs visit www.livsothebysrealty.com and contact your LIV Sotheby’s International Realty broker today.