Housing/property annual appreciation

#1. "Houses/propeties never lose value."
Absolutely NOT correct. The reason the market right now is so good for us investors is because of how much properties almost everywhere HAVE lost value. A lot of places this is because the values were overinflated in recent years and are just coming down, but also the market is in a huge SLUMP right now, which is why cbrpower has been posting with such a feeling of urgency to get GET OUT AND BUY, NOW!

Over time, though, real estate keeps appreciating. Up and up and up. That's why it is such a wonderful business to be in!

#2. Value varies from state to state, town to town, neighborhood to neighborhood. You just have to be watching and comparing the comps at any given time to know what is a good deal or not.

Sorry there is not a cut & dry answer.

Rina

P.S. Hope I didn't sound like I was yelling, Deb.

So the prices were over inflated? Does this mean that the value still stayed the same for the property but people were asking much more than they were values at?

I am sorry but this confuses me a little.

Thanks for your help! (again)

The value of real estate generally increases over time, but the Market Value of a property is determined by what people are willing to pay for it at any given time. That is why it is important to have comps to compare to. It will tell you what people have been willing to pay recently for a property similar to one you are looking at. You also have to consider what the house might be worth when you enter a different cycle. That's why Dean's approach works so well. He teaches us to make money in any of the 4 different market cycles by using the stratey that works in each. But that's a whole other subject.

Rina

There are many reasons a home would be sold at a certain price. Ex. location,condition,age,etc. These are just some examples of things that would determine a properties value. And last but not least. What the property and surrounding properties aka "Comps/Comparables" were last sold for. The market is determined on these factors. Hope this was helpful.

But properties never lose value? They always increase not lose?

Yes, houses do lose value.
Example: I bought my home over a year ago when the market was over inflated. I paid $215 on a home worth $245k, but because the market changed my home is currenlty worth only $165k. So unless I do some serious upgrades I couldn't sell it for what I bought it for now, I'd have to wait until the market changes to get what I paid for it. It all depends on what the current values are... I hope this helps clear it up for you.
Elena

homes don't really lose a lot of value OVER TIME, meaning that, yeah, elena's house has lost some of it's value, but it will spend WAY more time appreciating than depreciating in value, SULLY.

Deb, just so I'm clear on what you're asking , by properties are you meaning "improved" (with buildings), or do you mean vacant land?
In my experience the value of improved property, such as a house on a lot, fluctuates in value more than land does. As a matter of fact, as house prices plummeted in our area, vacant land has actually continued to increase in value, selling at increasingly higher prices over the last few years.

Elena gave a good explanation of how values can fluctuate. But, like she said, if you can ride out the market, eventually the value of her house will reach the amount that she originally paid for it, and continue to gain value.

Deb, you're doing great with all the questions and with all the work you're putting into this.
And thank you, There and Elena, for your help.

Rina

You, too, Sully. Just saw you pop in there.

It's my pleasure to assist in any way I can, like I said, I'm by no means a Superstar yet, but I'm more than happy to pass on any knowledge or information I have gained to others. I know what it's like to have little to NO support when you're starting out. If I had access to this site years ago I would be alot further now. The support here keeps you inspired and motivated, especially when there's no one else rallying around you!

Elena

Thanks Elena, Rina and Sully for your help with that little question.
Sometimes I get myself so bogged down in studying that I start to lose my way on a simple issue like that one.

I have always been told I think too much sometimes.....lol

Appreciate your help.

Deb

Glad I could be of assistance to you. Feel free to ask me anything, anytime, my door is always open. I know you have no support, like me, and I'm happy to be a part of your support team. Studying is great, but if it gets too much take a break and absorb what you learn, and by all means ask ask ask if you don't get it. Like Anita says, don't be afraid to ask!
Elena ;D

Thanks, I really do need the support and appreciate all that you do.
I am not afraid to ask questions and look stupid! I am from Australia so I just plead ignorance and it works. Along with the accent I find.......lol

I saw our Community Planning Director today and I asked lots of questions and none of them turned out to be silly at all. I learnt a lot from him about the future growth of our area. He gave me the name of a RE agent who he feels will be a great person to work with so I phoned this guy and he seems interested in working with me (fingers crossed), and he is calling in to meet with me in the morning. MORE SILLY QUESTIONS....

And tonight I attended the city council meeting and the Mayor knew me when I walked in and greeted me. I have pretty much annoyed the Mayor, City Manager and now the Community Planning Director over the last few months, they all acknowledged me tonight and they are keen to have me sit on one or more of their committees too!
I have never been too backward to come forward....

Talk soon and keep up the great work you are doing. It is nice to have you as a friend and colleague!

Wow, that's great! It sounds like you're making lots of progress. I'm glad you're not afraid to ask questions, I'm sure with your Australian accent people love to hear you talk anyway. It's one of my favorites!! Keep me posted on your progress, I love hearing about it. Thank you for the kind words, I'm here to help and share my knowledge and resources. I'm so honored to be considered a friend and colleague!
Elena

It is so great to have this contact as you know, it can be a pretty lonely place for me at times and I am getting so involved with trying to make my life better by doing this course that I can ignore my hubby for the most part. I am always too busy and don't see him that much now!

He really made me mad the other night when I was talking about what I was going to do with our house when I make some money in REI and he was in the other room and thought I couldn't hear him; he said "I won't hold my breath"!
I was so mad. I told him that when I do make some money, he won't be seeing a penny of it!

That is why it is so good to have the positive feedback from you and Rina. I hope we get to meet one day in person; maybe on an exotic island somewhere for a well earnt retreat......... lol

Well, off to do my morning exercise and I have the RE agent coming over this morning for a chat.

Thanks again

If you peek in again this morning before your meeting, I gave you some links in your PM for the question you left me. I hate the delay in there sometimes. I think you left before they got to you. Ergggg. (I don't know how you spell this sound I'm making. lol)

Rina

I read all posts on both nodes and I noted the questions to ask from eroberts. That was so great and I thank you with all my heart.
I did do a search for it but I typed in real estate agent and it never came back with anything that was really relevant. You must have used a different search line.

God Bless and have a great day!

Of course not. Ask anyone in Cali, Fla, Phoenix, Vegas etc. But the long term trend is UP ie look at where RE was 50 or even 20 years and look at where it is now.

20 years from now, it will be higher still.

Exactly right. Ultimately, it is supply and demand. How many people want to live there?

Also jobs.. can people AFFORD to live there??

Places like NYC, LA, San Diego WILL go up more than places like South Dakota. The former may have greater fluctuations too but over the long term, the appreciation rate will be higher. People just want to live there more.

However.. appreciation is only one aspect of REI.

A lot of times I am envious of people who live in low cost areas because the deals and cash flows they get are geat.

The critical piece of this pie is that there are NO margin calls in RE. Just because Elena's house is worth less than what she paid (owes?), no bank is coming to her ask for more money or force her to sell.

As long as she can wait it out, she will be fine.

And this is where the opportunity comes in.. Some people CANNOT wait it out. Because of job loss or transfer or divorce or medical bills or.... they must sell NOW. And to do that, they are going to have to take a discount.