We all have been hearing that home prices have been slipping all over the nation in recent months. How bad is it? Based on a Yahoo Finance article that graphically illustrates the performance of housing prices from 1992 to 2007 in 20 US cities, the rates of decline appear to register a slowdown based on historical year-over-year monthly percent changes in home prices for the last 15 years. As was pointed out by one of our astute readers, this just means that price appreciation has slowed down significantly from the previous years and absolute prices across the nation are flattening or showing a modest decline. That doesn’t shock me at all with all the hype I’d heard about these areas in recent years.
During the dot com frenzy, I had a co-worker in 2000 who was heavily into real estate rental projects and even some speculation. Before long, the frenzy turned into a bust and we were aware of lay offs in the horizon. My colleague had his act together when it came to ensuring that he had an alternative income and financial options in case the startup we worked at folded. The startup did, but he went on to pursue real estate development interests in Arizona and I’d guess Nevada as well. He even solicited colleagues at work for passive investment opportunities, enticing us to participate in these hot and growing real estate markets. He sent me brochures and information on new developments in Arizona, particularly in satellite areas near Phoenix like Gilbert, Tempe and even Glendale. I marveled at the thought of being a remote landlord and getting my toes in the water of something more novel and exotic than my usual staid mutual fund investments. But in the end, I was too chicken to try this new venture. As 2005 hit, I looked back at this “missed” opportunity with some regret. Today,
I’m just relieved I decided otherwise. my regret isn’t as great as it once was.
If you haven’t purchased a home yet, you could be a bit more relieved to see what’s coming up. Brace yourself for a little bit of pain because in the next year, 3% to 5% is expected to be shaved off these markets. The buzz around the real estate set is that another year or two and we should have some real buying opportunities in our midst. But in my opinion, if you’re at all in the market to buy a primary residence, these are price points worth considering.
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