Welcome to San Diego Blog | April 9, 2020

38.8% Appreciation Over Last 30 Years

I hope you and your family are healthy and safe!  I for one am struggling with being stuck at home with 2 boys (9 & 11) that my wife and I are guiding through home school and a one year old baby boy.  All while trying to work, provide guidance for our clients and simply be an outstanding human being.  This is hard!!  I miss my family, my colleagues and certainly my liberties.  This definitely makes me appreciate the freedoms I’ve always in enjoyed growing up in the United States and a beautiful city like San Diego. 

If you had ever told me that I wouldn’t be able to go to the beach and surf or even drop a paddle board in the bay and clear my head for a nice paddle, I would have said you were wrong and would have bet hundreds of dollars on that bet.  Well, needless to say, I would have lost!  So, I write this today staring out my living-room window with rain pouring down appreciating that while I’ve lost many of the luxuries I’ve always had being a citizen of the United States, I still have more to be grateful for than 90% of the world even under today’s circumstances.  It’s with gratitude that I share some good news today.

A look in the rear-view mirror of real estate in the US- 

It’s a well-known fact that owning a home is an excellent investment nowadays and always will be for people in the foreseen future. The large underlying question is, what can that resemble over the long term?

For the current week, I’d prefer to share some incredible data that originates from the National Association of Realtors® (NAR) and their recent research, ‘Single Family Home Price Gains by Years of Tenure.’

The research was done to reveal the standard appreciation amount at home costs in the course of the most recent 30 years.

Here are the initial 3 insights the research revealed about building wealth through home-ownership cross the United States:

1. The Sweet Spot Is At Least 7-10 Years – The research discovered mortgage holders are bound to harvest home value picks up when they “hold or remain in their home for seven ($38,000), eight ($42,000), nine ($45,600), or ten years ($49,500).  Keep in mind these numbers are higher for the West Coast.

2. Home Prices Increased In All Four Regions – Turns out, it’s not merely West Coast urban areas that progress admirably! The investigation saw how homes nationwide performed in 10-year increments, in the course of the most recent three decades.

Albeit mortgage holders in the West observed the most elevated returns (43%), there were as yet substantial increases for the South (39.4%), Midwest (36.9%), and Northeast (34.1%).

3. The Longer You Own, The More You Gain – Over a span of 7-10 years, the numbers reliably rose. In particular, seven years (28.8%), eight years (32.3%), nine years (35.3%), and ten years (38.8%).

Primary concern: Despite inevitable volatility in the market throughout the years, the home proprietorship is as yet a significant and dependable wellspring of wealth creation!

The sooner your buyers can turn the key on their new home, the faster they can begin increasing their assets. With the Fed slicing rates to an untouched low, now might be the ideal time to get this show on the road.   Even if Covid-19 causes some reduction to values, the drop in interest rates has allowed owners to refinance to all new lows.  I was personally able to take a commercial loan on my office from 5.125% to 2.75% which dropped my payment almost $2000 per month!!  A friend built his home in Point Loma 3 years ago and just refinanced an $832,000 loan from 4.25% to 2.875% – his payment dropped $641 per month.  That’s a significant savings!!  And for him, he doesn’t care if his value drops for now because as a current home owner, he will enjoy lower property taxes.  As you can see, any lowering of prices and interest rates will not only be and advantage to a buyer today, but also to many homeowners.

While times are uncertain, we can see that real estate is a stable and reliable investment vehicle and provides shelter.  It’s an asset that helps create wealth and it’s not one where you need to worry about earnings and paper values dropping at 35% overnight like we see in the equities markets.  Fore more information about what is happening in San Diego with Covid-19 impacts, give us a call: 619-356-3099.

Again, health and prosperity to you and yours! 

Chad Dannecker

Written by: Mia

Categories: Finance, Uncategorized

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