GreatWest GMAC Real Estate professionals know real estate is a good long-term investment. Although home values have stalled or experienced decline in recent years, longer snapshots in time have proved real estate to be a fantastic investment.
Let’s consider one scenario provided by a real estate professional. If someone were fortunate enough to buy a home even in 2002 and paid $500,000. If they put 20% down, there mortgage was $400,000. That home went all the way up to $800,000 in 2005 and is now only worth $560,000. They likely refinanced when it was worth $800,000 and their note went to $600,000. They received a 200% return on their original investment, tax-free. Their original investment was not the price of the house but the amount of money they brought to the table. $100,000. Many folks used their home as an ATM machine with a roof. And many more homeowners are in trouble today because of it. Sadly, too many got caught in the free money craze.
The good news is that fortunately many of these homeowners are holding onto their homes and some day when we see a return to annual appreciation, they will see their property values rise once again.
Understanding that housing markets are cyclic is key. For homebuyers, our current cycle offers excellent home buying opportunities.
Written for GreatWest GMAC
by: Myrl Jeffcoat
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