Why is it so hard to get across the idea that when the fed raises interest rates it has a chilling effect on the housing market? After 40 years of understanding the basics of economics since becoming an adult, the laws of econ are simple:
Make something more expensive, and typically you will sell less of them AND the rate at which they grow in value will slow.
The days of selling a property in two or three hours for more than your neighbor just sold for are less likely. We can never say someone will or won’t buy at any given price, because ‘free will’ is involved. If someone wants to pay a $1 million for a property worth $950,000, they can without obstacle when using their money. It becomes a little more difficult when you want to overpay and involve a mortgage, but typically with a higher down payment, you can still overpay to set appreciation on an uphill line if you want to.
Over the past 4 decades, I have never heard a single person say their goal was to go out and overpay for real estate, and I seriously doubt that is on any readers minds, regardless of market cycle.
Real estate does not appreciate on a constant line, and it is subject to substantial depreciation. If real estate values did not depreciate, then why for tax purposes does the government give tax credits for depreciation for investors in real estate?
Real estate was most likely intended to depreciate like every other asset that gets used. Try getting more for Yugo, Hyundai, Nissan, Ford, or probably 95% or higher of car brands. Only a few appreciate, and they are rare brands like Ferrari.
Your house, in a tract or custom format is not a collectible, but it is potentially highly desirable, and capable of out appreciating the mean. It depends on many factors, but none more than location, location, location. To Find out the true value of your real estate, and to set up a strategy for increasing your wealth regardless of market condition, we can help you. It’s what we do.
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