Real Estate Value: Real or Delusional

Rallying behind one of Mark Twain’s many droll quotes – “Buy land, they’re not making it anymore” – people in the newly minted twenty-first century pounced on whatever property they could get their hands on, refusing to learn the lessons of even the recent past.
For example, as the 1900s came to a close and the 2000s first made their debut, everybody was ranting and raving about technology stocks, predominantly those pertaining to the internet: the so-called dot.coms. That ended very, very badly, of course, but not nearly enough people thought twice before jumping onto the very next bandwagon that rolled along. And as property gave solid return after solid return after solid return, the movement gained a religious and borderline cult-like following.
Nobody could say anything bad about it without fear of a good dose of professional and social censure. People were having too much fun and making too much money on the skyrocketing real estate market. They made lucrative side-jobs and even entire businesses off of buying up homes and selling them a year or two down the road for worthwhile profits. Sometimes they put some effort into remodeling the houses and sometimes they wouldn’t. But either way, they knew they were going to make a buck off of the deal.
And they were dead right… until 2006, when the market peaked and then 2008, when it crashed entirely.
Though history has proven them tragically mistaken, to some degree, their blind faith and willing worship at the altar of housing prices was understandable. It’s always much easier to look backwards and judge people for their foolishness than to fight popular opinion in the heat of the moment. And it’s especially difficult when all of the oft-quoted facts point to that popular opinion.
After all, housing prices had skyrocketed compared to where they were in the 1990s and 1980s. A certain amount of upward movement is expected due to inflation and an improving economy, of course. And a chart of the housing market from 1970 and 1998 shows just that. In 1970, the median U.S. home cost just above $25,000, nominally. A decade later, it was over $50,000, and it had doubled again another ten years down the road.
By the start of the new millennium, the average person looking to buy a home had to expect a decent $125,000 price tag. But just six years later, when the index peaked, that median price was pushing upwards of $250,000. And, really, who wouldn’t want a piece of that action?
Throw in the federal government with its affordable housing acts, the banks with their badly thought-out policies, and the general populace who didn’t bother to look into the real reasons behind the unprecedented rise… and it was a disaster waiting to happen. But on the surface, it just looked like a good thing going on and on and on.
Sure enough – as we know now – the bubble burst, the market crashed and people lost fortunes in the aftermath. Now several years down the road, the housing market still can’t seem to find its footing. Its performance has seemed sorely lacking ever since, and nobody wants to touch it as a result.If your wondering how much your property is really worth contact me at 615-476-2953.

Joseph Goodman *ABR*GRI*SRES*
The Goodman Group
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