"Homes double in value every 10 years" (agents, banks, prices)
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In 1974 a home was purchased for $88k in CA. In 2008 it sold for $1.15 mil. That is an annual 7.9% growth rate, unless my math is off. This was typical for the Bay Area and some increased more.
1974.........88k
1984........176k to double in 10 years
1994........352k to double in 10 years
2004........704k to double in 10 years
2014.......1.40mil to double in 10 years.
So this house doubled in 10 years 3 times and was well on it's way to doubling again in the next 10 years.
In 1974 a home was purchased for $88k in CA. In 2008 it sold for $1.15 mil. That is an annual 7.9% growth rate, unless my math is off. This was typical for the Bay Area and some increased more.
1974.........88k
1984........176k to double in 10 years
1994........352k to double in 10 years
2004........704k to double in 10 years
2014.......1.40mil to double in 10 years.
So this house doubled in 10 years 3 times and was well on it's way to doubling again in the next 10 years.
This is an real life example.
Can I use examples of houses in blighted areas selling recently for a dollar to show that on average, house prices go to $1? If not, I don't think that picking a particular house in an obvious bubble area is a fair way to show that houses on average double in value every 10 years either.
But even your example doesn't show that. 1.15M in 2004 is about 290K in 1974 dollars - the 10-15% inflation of the 70's adds up really quickly when doing comparisons over that decade. Basically, you're measuring how much less the dollar was worth over the period a lot more than you're measuring increased home values. So you have to exclude the effects of inflation if you want to measure changes in home value.
So instead of 7.8% gains, it's more like 3.5% a year, or doubling every 20 years or so. Subtract out taxes and upkeep over 35 years, and it's even less. And this is in the Bay Area, which is one of the hottest markets in the country (until recently, at least). You have to average in results from, say, Detroit and Cleveland to get to the NAR's claim of "on average...". I think that might change the numbers a bit. Basically, if you can only justify the NAR's claims by pointing to one of the areas with the biggest run up in prices in recent memory, I think that's a good sign that they are misleading at best.
According to the December 2007 S&P/Case-Shiller Home Price Index (pdf), single-family home prices in the San Francisco MSA fell 3.2% from November '07 to December ’07 and are down 10.8% year-over-year.
A 10% drop in average SF home prices makes your example return 3% instead of 3.5% a year over the 35 years, adding 2 or 3 more years to the time to double.
In 1974 a home was purchased for $88k in CA. In 2008 it sold for $1.15 mil. That is an annual 7.9% growth rate, unless my math is off. This was typical for the Bay Area and some increased more.
1974.........88k
1984........176k to double in 10 years
1994........352k to double in 10 years
2004........704k to double in 10 years
2014.......1.40mil to double in 10 years.
So this house doubled in 10 years 3 times and was well on it's way to doubling again in the next 10 years.
This is an real life example.
Bill, are you for real w/this?
Constant blaming of the media for today's problems and blindly defending the NAR by you puzzles me. I don't understand for such a smart realtor why you put yourself on an island and constantly do this???
Constant blaming of the media for today's problems and blindly defending the NAR by you puzzles me. I don't understand for such a smart realtor why you put yourself on an island and constantly do this???
I'm not defending anything, or anyone.
Someone said that doubling in price in 10 years could not be done. I'm showing a real life example that it was done. In fact as the example showed, it happened during (3) 10 year periods. It was being done in California and in many other places during that time.
So I give you a real life historical example of three and a half decades, and instead of accepting that it can and did happen, you again patronize me with this "you're such a smart realtor", insinuating that I really don't know what I'm talking about, and retort with your constant anti-NAR diatribe.
Someone else points out that the 7.9% is only 3.9% real growth. Well if the average inflation rate was 4%, then that is correct, and one of the reasons for owning real estate is to beat inflation, and beating it by 3.9% over a period of 34 years is very good in my opinion. What is left out of all this is the tax savings from the interest deductions, because that will add to the 3.9% above inflation gain.
So if a person decided to rent from 1974 to 2007 and instead of putting the 10k down on a house, put it in a bank paying 3.9% for 34 years, what would they have? They would end up with $36,722, (not even keeping up with inflation; and would not have had an interest deduction from their taxes.
Actually, they would have much less because each year they would have been taxed on the interest earned during that year, whereas the gain on the sale of a home was, in the past, tax deferred if one bought another home of equal or higher value, and today up to 500k is completely non-taxable every two years.
In 1963 I bought my first house in Dayton, Ohio for $15k yes (15k). It was a nice brick house with hardwood floors, and a pool sitting on a 1/2 acre lot. It was hand built by the husband and wife owners. We moved to CA in 1966 and rented the home out. In 1968, (after 5 years) we sold it for $25k. That was a 66% increase in 5 years. And it was not in California.
If you want to put blinders on and just look at the present, and the past few years, and don't want to accept history, so be it.
I don't intend to get into another long drawn out argument with you on this subject, so you can ignore history and make another post to have the last word if you wish.
And if you decide to insult me again, then please use some originality next time instead of the constant, "you're so smart, you're really dumb" routine.
Anyone else see that commercial promoting real estate ownership? Must be the National Association of Realtors at it again. FIne and dandy if everyone's salary doubles every 10 years. Somehow I think this view is fatally flawed.
I don't know if my home has doubled in the 10 years I've owned it, won't know until it sells but i can tell you my salary has certainly doubled in 10 years. guess i'm just lucky.
reminds me of the very small print investment firms put on their ads while touting the success of various funds-------"past performances are not an indicator of future performances"
But yet, they tried their darndest to convince you they are.
Someone said that doubling in price in 10 years could not be done. I'm showing a real life example that it was done. In fact as the example showed, it happened during (3) 10 year periods. It was being done in California and in many other places during that time.
So I give you a real life historical example of three and a half decades, and instead of accepting that it can and did happen, you again patronize me with this "you're such a smart realtor", insinuating that I really don't know what I'm talking about, and retort with your constant anti-NAR diatribe.
Someone else points out that the 7.9% is only 3.9% real growth. Well if the average inflation rate was 4%, then that is correct, and one of the reasons for owning real estate is to beat inflation, and beating it by 3.9% over a period of 34 years is very good in my opinion. What is left out of all this is the tax savings from the interest deductions, because that will add to the 3.9% above inflation gain.
So if a person decided to rent from 1974 to 2007 and instead of putting the 10k down on a house, put it in a bank paying 3.9% for 34 years, what would they have? They would end up with $36,722, (not even keeping up with inflation; and would not have had an interest deduction from their taxes.
Actually, they would have much less because each year they would have been taxed on the interest earned during that year, whereas the gain on the sale of a home was, in the past, tax deferred if one bought another home of equal or higher value, and today up to 500k is completely non-taxable every two years.
In 1963 I bought my first house in Dayton, Ohio for $15k yes (15k). It was a nice brick house with hardwood floors, and a pool sitting on a 1/2 acre lot. It was hand built by the husband and wife owners. We moved to CA in 1966 and rented the home out. In 1968, (after 5 years) we sold it for $25k. That was a 66% increase in 5 years. And it was not in California.
If you want to put blinders on and just look at the present, and the past few years, and don't want to accept history, so be it.
I don't intend to get into another long drawn out argument with you on this subject, so you can ignore history and make another post to have the last word if you wish.
And if you decide to insult me again, then please use some originality next time instead of the constant, "you're so smart, you're really dumb" routine.
since I'm "anti-NAR", I guess your "pro-NAR"?
I'll ask you a direct question. Please answer directly...no one here needs another anecdote.
Do you acknowledge the NAR's campaign to influence buyers is deceiving?
In 1974 a home was purchased for $88k in CA. In 2008 it sold for $1.15 mil. That is an annual 7.9% growth rate, unless my math is off. This was typical for the Bay Area and some increased more.
1974.........88k
1984........176k to double in 10 years
1994........352k to double in 10 years
2004........704k to double in 10 years
2014.......1.40mil to double in 10 years.
So this house doubled in 10 years 3 times and was well on it's way to doubling again in the next 10 years.
This is an real life example.
Can be done. One income households convert to two incomes in the late 70s through the 90s. Interest rates fall from double digits to 3 percent. Median downpayments go from 20 percent to 10 percent in the late 90s and finally to 2 percent in 2005. Do you think these trends will continue to move in a direction favorable for real estate purchase?
I do not disagree with NAR and I can only use my recent history. Bought in 95 for $113k sold in 2006 for $459k. Just like today's market there are ups and downs along the way but overall it is an excellent return.
In California we saw the following:
1968-1979 = 10.86%
1980-1989 = 7.95%
1990-1999 = .94%
2000-2006 = 12.29
Last 38 years average appreciation 7.75%
In Orange County
1970-1980 = 15.04%
1981-1990 = 9.43%
1991-1999 = .90%
2000-2006 = 13.07%
36 year average 9.76%
The other part of the NAR message is all real estate is local!
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