What If Houses Didn't Appreciate?

If I had a crystal ball and looked 30 years into the future only to find out that real estate had not gone up in value what would I tell our clients to do?

The answer is simple. Buy now.

Over the past 7 or 8 years everyone and their dog has become a real estate speculator. We all have visions of 20% returns year over year. Most of us (myself included) have never seen a market where home prices have fallen. In the Grand Junction area we have been particularly blessed with an appreciating market. A recent rise in inventory and increased marketing times has caused some concern with people who make their living in the real estate market.

Now that the market appears to be stablizing (and that IS what it's doing) what do we tell buyers? Do we tell them to try to time the market bottom? Do we tell them that house prices will continue to go up? Do we try to look into our crystal ball and tell them what might happen?

My position would be this. Tell them that even if home values never went up they have to live somewhere. They can pay their mortgage or they can pay someone else's mortgage by renting. After 30 years of paying on their mortgage a $300,000 house today that didn't go up in value would be worth $300,000 and the buyers would own it. The same house, if rented would be worth the same money in 30 years. Let's say rent stays the same and never goes up... What you have done is paid for that landlords house. You have nothing to show for your decades of payments.

If house values never go up you still OWN your house. You can put astroturf in the back yard (provided covenants allow for that), you can paint the dining room red, you can put in tan carpet rather than the landlord putting in gray, you can hang pictures on the wall without worrying about a security deposit, you can maintain the home to your standards, not a landlord's. You get the idea... It's goood to be the owner.

My advice would be to buy now. I would love to hear some of your reasons for buying now even if house values never went up again.

Kevin Wade
kwade@ccmclending.com
970-243-7800 - Office
970-201-2310 - Cell