First Time Home Buying Secrets - Truth About Appreciation

Kenton Brown discusses the perfect opportunity for first time homebuyers. (this is part b of a two part segment)

Transcript:
Interestingly enough, Kenn and I looked at these stats that I wrote down here, but Gary Keller was at a national conference and he was talking about a 4% appreciation rate in real estate. If you go back to 1950, you can draw a straight line and say if this real estate appreciated at 4% per year, what does it look like in 2009? Well, it was right along that line until about 1999 when it went way above that line. There were people in Florida flipping property, doubling their money over night. Have you heard about this? It was that lets get rich with real estate mentality. So what happened is the marketplace got so out of whack that it had to correct. Those wobbles cant correct themselves. Any investment that you buy thats going to double in one day, do you think that model can sustain itself? No. It cant. Nationally theyre saying that real estate came up so rapidly and that it came down like things do when they go up fast in price and they come down. If you were to draw that 4% line now, the appreciation rate is right on that 4%, which is a historical average of real estate appreciation in this country. So I started looking at a $150,000 house in a 5 year period with an appreciation rate of 4.44%, which was 2007. Now, if you round this back 25 years through the Texas A&M real estate research, its about 5.9% or right at 6%. A $150,000 house is worth $198,840 over a 5 year period, which is a pretty good return if you look at your 401Ks and other things that youre investing in. So this website is really helpful too, its OFHEO.gov. Theyll tell you a lot of cool stuff in there. But really, what that means is about a 35% increase over that timeline. Now, I was asking Kenn why Texas is #4. Im from Texas, I want Texas to be #1. But the #1 state is North Dakota. #2 was Wyoming, would you have thought that? Alaska is #3 and Texas is #4. When you look at Austin, were ranked 6th in the nation. When you watch all this national crap, and pardon my French, you should use your filter because theyre talking about this stuff because they neglect to tell you about how California went up 800% and now is down 30%. They dont tell you that part in the headline, they just say real estate values down 30%. And you get scared. The reality is that real estate is a sound investment and we can ground it over a long period of time. I think thats all Im going to say right now Kenn if you want to come back up.

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[TheREIMaverick]

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