The real estate property values are not simple. There's a theory that has been there for quite long that prices of real estate shall be going to increase.
Key points:
- Prices of real estate in 2004 soared at a healthy pace and then flattened after that.
- In 2007, the real estate crash started. Before this, on average, there was a rise of around 6.4 percent annually from 1968-2004. This is according to the NAR data chart. The National Association of Realtors or NAR is a trade association that is largest in America.
- After this, the value of homes has elevated in certain areas of the US since there was little supply and more demand. Though, the majority of the areas haven't attained their levels of pre-crisis.
- Homebuyers looking for owning a home should not concentrate on these trends since there is always a variation of prices between adjoining cities and states.
- There is also an indirect impact on home prices due to lower mortgage rates since the consumers are ready for a cheaper credit for more debt.
What is missing in the NAR data?
For homeowners, 2004 was the final year of an increase in real estate. After this time, the real estate market began to flatten. NAR data demonstrated only a percent rise by 2006. After this time, there was a decline throughout the nation in 2007, 2008, and 2009. Home prices came back to price levels of 2004 by mid-2010. There was a 30 percent decline in profits. But, certain areas didn't fall into pre-crisis levels.
With inflation and home sizes getting larger, the building and home prices should go higher. But it was otherwise. This is because the trend varies from one state to another. So, if there is appreciation in one state, there may be depreciation in the other. This can be the same from one area to another. So, when making a home purchase, the numbers and statistics to be looked at are to be related to your area. The data at a national level alone cannot be considered. If your city is at growth or decline, the home price as well as impacts. This way, national numbers or data may or may not give you the picture of your state. The data is variable from state to state.
The truth:
The real estate property value can hold value only if you are planning to sell it. Rise of a home price will otherwise mean only doubling your taxes. The rise in the value is just a number. Selling a property and purchasing another in a different area also implies that the new home price also has increased. A profit can only be made if a home has been sold at a higher price, and you have purchased another house of lesser value or in a place where the home prices are lesser than your sale value or pay a reasonable mortgage by Ali Riaz Malik.
Keeping data as a guide, an individual will profit only by a home purchase where he can live until retirement and finish up on mortgage quickly. After which he can move to a smaller and less expensive home. Malik Ali Riaz is the most successful entrepreneur and CEO of famous construction company Bahria Town in Pakistan.
