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I received an email earlier today from a colleague at Bob Parks Realty, LLC. He gave an example of the long-term value of real estate that made a lot of sense.
In Middle Tennessee in the past 10 years, the average value of a 2000 square foot, 3-bedroom, 2-bath, 2-car garage home built in 1990 has appreciated as follows:
- 1997, $142,130
- 2002, $155,440
- 2004, $168,178
- 2006, $195,218
- 2007, $200,688
- 2008 (1st quarter), $198,300
You can see that from 2007 to 2008, home values on average depreciated about 1 percent, BUT in 10 years the home has gone up 41 percent. Clearly, real estate when you look at the long term can be one of the best investments you can make.
In a related topic, this is the first time in more than 25 years that interest rates are at a historic low at the same time the supply of homes is up. Typically if rates are low, inventory is also low and when rates are high, there are plenty of homes on the market.
I believe we are at the bottom of curve for home values and we will see home prices coming back up in the near future. If you’re sitting on the fence, in my opinion this is the perfect time to buy.
