When Will Real Estate Values Begin to Appreciate Again?

When will the nation’s property values begin to appreciate again? This is the $64,000 question that real estate professionals, investors, and mortgage professionals would like to know. The truth is nobody can accurately predict the return of the real estate market.  Like everyone else, I can’t predict the end of this crisis either, but what I can do is tell you what will have to happen to facilitate that change. The answer is quite simple: America must reinvest in herself once again. Without an investment, real estate is as worthless as the Dollar is today.

Think back, or read a history book, about how families in the ’40s and ’50s used to buy homes. Young couples lived with Mom and Dad during the “courtship” prior to getting married, until they had saved 20% to put down on their “dream home”.  They made an investment in America, (i.e. the American dream). In the years that followed we have devalued that investment in lieu of credit and the easy access to it. Property values rose artificially and our nation became addicted to credit.

The value of the dollar has been demolished due to the same principle. When we place value in assets based on their ability to be easily bought and sold versus the value that has been invested in the asset, we devalue its worth. For example, two years ago I could have bought an $800,000 house (and I assure you that I cannot afford a house that expensive). The owner of that asset (the $800k house) placed value on his asset based on the availability of buyers like me who could buy the home. The problem is, this homeowner probably had less than 5% invested in the home. Where do you think that homeowner is today?

Had he put 20% down on his home, he would then own a valuable asset in which he has a real investment. This outlay of cash forces him to buy and sell his home in the same manner he would move an $800k investment around in the stock market – very carefully. Thus, the home has REAL value. However, having bought the home with little or no money down, the asset became disposable and so follows the real estate market.

So, as I said earlier, I cannot predict when the real estate market will bounce back, but I can tell you what needs to happen before it does. America needs to reinvest in herself by getting back to solid buying and selling principles. This strengthens home values, which encourages investors who employ builders who employ carpenters, painters, real estate agents, loan officers and so on. America was built on the “American Dream” which has turned into the “American Nightmare”; she can only be rebuilt by hard working Americans, not by Wall Street.

Aubrey Clark is a Syndicated writer, author and editor for Direct Banc, a low interest rate credit card directory.His current project outlines how to choose the best Airline Miles Credit Card and how to maximize the benefits when using it.

267 thoughts on “When Will Real Estate Values Begin to Appreciate Again?”

  1. I feel that the real estate market just needs to see some positive news and reinforcement to encourage people to start investing again. Although the process make take a long amount of time I myself have faith in the American real estate market and what it is truly capable of.

  2. It’s very interesting how it used to be such a big market and now it’s impossible to predict. I think it will go up, not sure when, but things are changing. Small changes can cause chain reactions, hopefully good ones.

  3. This was obviously a topic that touched a lot of nerves. Boise Idaho Real Estate is still in turbulence. unemployment is at about 10% so not only are sales slow but Notice of Defaults is rising.

    Trey

  4. I think the most important part of this blog is the 3rd sentence. No one can really predict when the real estate market will on a whole get better. You constantly see/hear “analysts” and “experts” talking about when a recovery is going to take place. But truth be told, no one knows. If people can predict when the recovery will take place, they should also be able to predict when the next recession is going to happen.

  5. Predicting it is definitely a trick. All I know is that investors are buying up real estate Left and right right now in this area. So I guess if your an investor now is the time to buy.

  6. Well it is now April 2010 and I have seen some slight movement in the residential land market. I live and work in a golf resort area Seems that out of the few builders who were still standing when the dust cleared, only a few are able to function in a full capacity. As we all know, it’s extremely tough to get loans right now, and this is especially true for speculative homes. Although we have seen one possibly encouraging trend: once the builders get the spec homes done, it seems to sell rather quickly. There just isn’t any competition for these builders right now except for REO stuff, most of which has been swinging in the wind for a year or better.

  7. I know here in Maui we have already started to experience appreciation in some areas of the market. People shouldn’t expect to see similar appreciation rates to those that lead to the height (and fall) of the market (unless we are talking about inflation-based appreciation, which brings many other problems).

  8. Thanks for sharing the information on Real Estate Values. The Manhattan Apartments buying and renting season is NOW. Checkout the HOT JUST Listed Condo Sales and apartment rentals in New York real estate firms such as Domain Properties – The Corcoran Group and Halstead Property

  9. While Sarasota real estateis already getting pricey, there are still bargains available in Bradenton and Lakewood Ranch communities and other smaller towns around Sarasota

  10. I think in the future increasingly stringent lending standards will weed out those that would walk away from a home.

  11. Prices in the Phoenix area have basically been flat for several months, which is a good thing. Year over year prices for April 2010 we actually saw a 1% increase believe it or not!

  12. The Northwest Arkansas real estate market has really picked up lately. Most of the activity is in residential and is fueled by investors looking at the last remaining REO listings, and by those trying to get in ahead of the upswing. Bella Vista Realtors are doing their best right now to accommodate all the needs but buyers and sellers alike have to be patient.

  13. Hi,
    You post is depending in investing area.It is give a massage for investors that how to invest in property.I agree without an investment, real estate is as worthless as the Dollar is today.Because without investment the people not to buy any property.Indian Real Estate Agents market has picked up lately.America is the most largest country in whole world and Indian Real Estate Agents is also most qualitative.Well I think your massage is very useful.
    I like this post and thanks for sharing your information with us.
    Indian Real Estate Agents

  14. My partner and I put out a report called the Normalcy report. It is about what normal is as opposed to trying to compare 2005 to 2008 or ’09. We look at 20 economic indicators including local airport traffic, new construction permits, unemployment and many more. We have years to go before it is normal again.

  15. Great article. If we all do our due dilligence, then we take into consideration the calculated risks. Its not the Govt. that will stimulate the market to go up, its the investors on the front lines making that happen.

  16. Here on the sunny Gold Coast Australia, we are seeing much interest from buyers from your country and Europe, our property markt has held up quite well due to a lack of supply and a strong economy, but because of the media it is a buyers market here too. Right now is a great time for you to invest in Australian property before the crowds start flooding in.

  17. I think that the overall real estate market has two sides to it: one that involve the consumer home owner or home buyer, and the other side that involves the real estate agent. The two sides do not necessarily share in the same plight, for although the average price of home has steadily declined year over year, the overall activity for the active agent has increased. I hear many agents complain that the market is just not there for them, and to this I just say that they are not there for the market. Transactions in the northwest Arkansas real estate market and other areas are happening — and a lot of them. It’s only a matter of allying yourself with where the activity is concentrated.

  18. Right now, the credit markets are trying to reinvent themselves and are finding reasons to not make loans to people who are credit worthy although have some dings from this economic crisis (with credit dings being the norm these days rather than the exception).  The banks and financial institutions need to find solutions that allow people who are hard-working, employed and have the ability make payments, the opportunity to have the American dream of home-ownership.  For example, many people are caught in the cross-hairs of this mortgage collapse.  They find their houses worth tens of thousands of dollars (or more) less than the mortgage on the property.  With this in mind, many home owners feel a sense of helplessness and despair – and instead of having financial institutions contacting them and letting them know they will develop strategies to come up with a win-win environment, the homeowner is often stonewalled and passed from one department to another, with no real communication nor answers.  If the banks communicated with the homeowners, letting them know they truly have everyone’s best interest in mind, this would go a long way to instill hope, certainty, and the belief that we will all get through this successfully – together.

  19. Thank you for your thoughts on real estate investment and appreciation, Aubrey. I could not agree more that we have escalated to a nation addicted to credit. Unfortunately too many Americans believe that being able to afford the payments on an asset is the same this as being able to afford the asset itself. I hope that we are able to learn from this crises and invest in real estate more responsibly in the future.

  20. Back in the real estate boom, I met a lot of people that were practically living off the increasing equity in their homes. As the value of their home would go up, they’d just refinance their mortgages and live off the money they put back in their pockets. That’s not a healthy lifestyle. Like David said in this great article above, “make an investment in America” and “get back to solid buying and selling principles” to turn this market around.

  21. As soon as people starts getting jobs and our economy go back to the track. It will little difficult for people to start investment in property market again as they have seen huge decline in property market during recession.

  22. It really is about locality. Ever locale nationwide, worldwide for that matter is different. Already here in The Villages, Florida we are seeing more and more interest in home buying. It doesnt always stay bad. Real Estate like anything else is cyclical. It is coming back.

  23. In Northern Virginia we have seen increases for the last couple of years now but properties in Cyprus are just reaching the bottom now.

  24. It is highly related to the economy. In some countries the property prices are appreciating in others they are not. for example in spain and greece the properties their are depreciating. Meanwhile it is an opportunity to buy. While in the Middle-East property prices are appreciating quickly.

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  26. Hi David, Thanks for writing an useful article. I agree with your post. However you know American real estate investors choice is totally different. specially you have made an example of history life “dream Home”. Thanks for article and wish you keeping up…..

  27. Real estate investing is not dead. And, as matter of fact, with the scandals in the banking industry, coupled with the Government’s apparent incompetence in managing America’s retirement, I feel that it makes real estate a flat out sweet investment.

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