If you’ve been watching the local news lately, you’ve likely seen that the real estate market is starting to slow. More accurately, I’d refer to it as a more “normalized” market as we’ve been red hot for years.
The truth is that we are just a few months short of having the longest economic recovery in American history. In turn, that means we are overdue for our next change in cycle.
We know that real estate generally goes in 4 to 6 year cycles so nearly every time there’s 6 years of appreciation, there’s 6 years of depreciation. Just recently, home values finally got back to the 2008 peak values and though they went a touch higher than that, we are starting a possible downward trend again. This is normal and expected.
This is nothing to be nervous about. It happens all the time. There’s no need to ever be “fearful” about the real estate market as they are simple cycles that we go through over and over.
It’s a mistake to believe that real estate is always going up or that your home will be worth more money in two years than it is right now. As a matter of fact, as of today’s date, you are nearly guaranteed to have a home worth LESS money in two years than it’s worth today.
This doesn’t mean you should move or that you should make any drastic changes at all. Frankly, you may want to stay put for a while. But it’s important to be an educated and knowledgeable homeowner that times that market correctly if you ever need to make a move up or down in value.
Let’s look at an example. We met homeowners back in 2008 that were thinking of selling but decided to wait another year or two before making the move. Of course, the home value was FAR lower and ended up being slashed by nearly 50% before it was all over. Now that’s not a problem at all if you decide to stay where you are. Just like stocks, you lose money if you sell low and can’t wait on a bounce back or recovery. But if that owner wanted to get that 2008 value when they sold, they had to wait until 2016 or 2017 to get back to that number. That was 4 years of depreciation and then 4 years of recovery to finally get back to the peak price.
If you look at the real estate history throughout all of the United States, you’ll generally see 4 to 5 years heading down, then 4 to 5 years heading up. That’s fairly normal. But you should know that if we are in fact at a PEAK IN VALUE, it may be 2026 or 2028 before we reach today’s values again (as history often repeats itself).
Again, this is only a problem if you are looking to possibly move somewhere within those middle years as you may take a hit on home value. But remember, this is just an example of what MAY happen in the real estate market. While many things can be predictive, they certainly aren’t guaranteed. Even though we are in the middle of what may be the longest economic recovery in American history, there’s a chance that upward trend may continue. However, the slowing of the real estate market is an indication that it may continue along that depreciating path.
I’m more than happy to speak with you about different options for you and your family. Simply give me a call and we can discuss your thoughts!