New market down but housing values still way up
By Justin
Hunter
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.