Tomorrow’s Market
What will real estate be like a year from now? Three years? Five years? Ten years?
If you knew that, you could position yourself to take advantage of coming changes. You could play the market for big profits.
I don’t have a crystal ball that can predict the future . . . and neither does anyone else. However, if we count on the future to be somewhat like the past, we can get some idea of how it should play out over the next decade.
Real Estate Facts You Should Know
-Over the past 50 years, the average rate of annual price appreciation for residential property has been about 5 percent a year.
-Since the Great Depression of the 1930s, real estate has moved in cycles lasting approximately 14 years—7 years of expansion followed by 7 years of weakening followed by a new expansion of 7 years and so on and on.
-As Will Rogers, the famous American raconteur, was fond of saying about real estate, “Better buy some now because they ain’t making any more of it!”
If the market happens to be moving sideways (meaning not much price appreciation, not much weakening—a balance between buyers and sellers) or if it happens to be actually declining, does this mean it’s a bad time to move from renting to owning?
In the short term, perhaps. Since it’s almost impossible to peg the exact bottom of the market, you could conceivably buy while prices are declining and find that your home is worth a bit less next year than you paid for it. No one likes to be in that situation.
But what about the long term? What about into the next decade? If we look at the past, we can see that the chances are excellent that a new real estate boom is just beyond the horizon. That just as the prices of the 1990s seemed ridiculously low judged by the prices of the early 2000s, the prices of today might seem just as ridiculously low judged by the prices of tomorrow.
Don’t be shortsighted. Don’t be one of those naysayers who say things like, “Stay away from real estate—it’s a bad investment.” Seldom are investments bad or good, per se. Sometimes it’s just a matter of timing. Buy while the price is down and ride the wave to higher profits, and any investment will seem great.
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