Posted: 5/26/2005 6:03:25 PM EDT
| I recently bought a house. 3BR/2BA brick home built in 1975 with a one car garage in a decent neighborhood. Not a mansion, but by all means not the slums. I paid $97,000 which is a deal, but during the research I found out the house sold in May 2004 for $67,000. Brand new in 1975 for $32,000. So, the house increased in value by $35,000 in 29 years, and then jumped another $30k in one year. I just wish I had a time machine and a lot of money to by lots of houses last year. $97,000 is still a deal, but it still gies me a little heart burn. |
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My mom bought her first house in 1998 for $184K. Now, 7 years later, it is worth about $400K. Her house is a 3BR/2BA brick townhome with a fire place a wood flooring. She's always told me that I can rent it from her when I graduated from college. There is no way I could afford that. BTW, Congrats on the new house. |
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The reason is simple... Low interest rates cause a huge increase in home prices. Low rates allow people to afford much more expensive houses, and allow people who would otherwise be kept out of the market to buy for the first time. Thus, demand skyrockets with price... |
Hurricanes and housing shortages don't hurt either. |
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With the lower mortgage rates, the prices went up. I am on my third house. First one I bought for 47,500 sold it three years later for 68,000. Second house I bought for 73,500, sold it six years later for 122,300 The house I am currently in I bought for 163,000 a year ago this month, and if I sold it today I could get 200,000+ for it. My original house was 1300 SF 2BR 1.5 bath Second was a 1700 SF 3 BR 3 bath Now I live in a 2500 SF 4 BR 3 bath with double carport, work shop, Master Suite is huge. I could stay here forever but most likely will sell again. My house is growing, but the payment is not...... The key is to watch the market very close in the area you are buying. Know what type of people are buying in the area, and what type currently live there. And don't be afraid to knock on some doors and ask questions. 
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In 1997, Miz LWilde and I built Toad Hall (Non-Disneyphiles need to read "Wind in The Willows" ) on the pond in the woods for about $197k. Four years ago we refinanced just to lower payments. The home appraised at $275k A year ago, we re-fied again, this time to finish the basement and take out a bit of cash. Office, large BR, gun vault/armory, full bath, and large rumpus room for the brain damaged ones. That cost me another $40k (I got a good deal!). BEFORE the remodeling, the place was appraised at $370k. It is now worth about $450k.The market is crazy. I have a millionaire friend, ex-Marine Vietnam Grunt who made his $$$ in real estate. That is all he does for a living now...buy and sell properties. We discussed the overinflated market last night. He believes that the market, expecially in Kalifornistan is way overpriced and due for a major correction. Folks have been snatching up property as fast as they can...with all sorts of "creative financing" including interest only and adjustable rate loans. As long as inflation stays low and interest rates stay way down, say under 6%, those folks should do ok. IF the interest rates begin to climb and inflation creeps back into our lives, say if the Democrats retake the reins of power in DC, then millions of people might be in REAL trouble. When we Boomers were buying our first homes in the '70s, the rates were WAY high...say 11.5%. There was room to fall and for things to get much better. Now if there is a correction...it will be in the wrong direction...the only way to go. |
The Gov't doesnt mind letting you roll it into a larger house. How about your property taxes? They have to be going up as well. I always tell people that think they "own" their houses, to stop paying their property taxes and see what happens. Its sad but true. 
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