It has been widely stated that housing prices are at all-time lows and getting worse. The reality is that this is not true.
Absolutely, compared to the artificially inflated prices of 2005 – 2007 created by the irrational interest rate behavior of the Federal Reserve, housing prices have dropped precipitously. This has of course hurt those who invested at the time, but those who buy high and then sell low, always end up on the wrong side of the investment ledger.
The reality is that over the last ten years, through the first quarter of 2009, housing prices have risen nicely in all major markets. Real estate has always been considered a long term, reasonable return investment. From 1999 to 2009, it has been just that.
In Los Angeles, where housing prices have fallen almost 25% in the last two years, they are up a net 23% in the last five years and a net 116% in the last ten. That is a respectable 4.5+% in the last five and 11.6% per annum return over ten years. I think most of us would take that.
Midwestern cities such as Chicago, St. Louis, Indianapolis, where the two year drop has been mild, all showed typical gains over the last five and ten years.
What that means is that prices are now back to what they should have been had not unreasonably low interest rates, caused by the Federal Reserve, driven home prices through the roof in the middle of this decade.
Homeowners, it is time to get back in the game.
Lesson to be learned – buy low and sell high.
Author of five novels available on Amazon, numerous articles and other commentary.