After peaking in early 2006 the housing market in the United States experienced a steady decline that reached an all-time low in 2012.
This led to the credit crisis that has sent so many home owners into foreclosure and has been the greatest source of fear for homeowners in the last two decades.
That fear swept through the housing industry as credit unions, banks and other lending institutions tightened their belts and made no money down, and 120% loan to value ratios a thing of the past. Home values spiraled downward; no one new knew when it would end.
Now for the good news
Fast forward to 2014. The housing market in most of the country is rebounding. Here in Lakeland, Florida, new home construction is on the rise and home owners are surprised to learn that median home values are rising as much as $10,000 per year.
Out with the old in with the newâ€¦thinking
It used to be that most home owners thought of owning a home a little like having a gold mine. You didnâ€™t even have to work to get the gold out you just took care of the place and â€œpoofâ€ you made money. That was then, things are a bit different now.
Understanding how the market reacts helps you understand what happens to your investment over time even when a crash occurs. After a crash the markets slowly begin to settle. Homes that were foreclosed or came up for short sales are scarce and investors donâ€™t have much to invest in. The best part is that 3 to 5 years after a crash history has proven that home values rise 10 to 15 percent above their pre-crash values.
Looking to the futureâ€¦
So what does that mean for your future home purchase in terms of its value as an investment? It means that all the old rules still apply.
- Buy smart, donâ€™t pay more than what your home is worth
- Donâ€™t buy more house than you can afford
- Plan on staying put for at least 5 to 7 years to build equity
- Think of your home like a forced savings account
Your home is still your biggest investment and the faster you build equity in it the better an investment it becomes. Try looking for 10 or 15 year loans instead of 30. You can accrue equity faster and save on interest.
Thinking of buying a home soon? Ask me about buyers counseling where we can get together and discuss your goals and how to make owning a home as stress free as possible. Just give me a call at (863)-271-8700.