While it’s true the real estate market has bounced back in many parts of the country, including downtown Chicago, the housing landscape is certainly much different than it was just a decade ago. Prior to the credit crisis that started around 2008, homes in many parts of the U.S. were seeing appreciation rates of roughly 15% year-over-year, and in some cases, even higher.
Even in a recovering market, home values still aren’t dramatically increasing like they used to back in the 90s and early 2000s. With so much information available to today’s consumers, tracking home values and market statistics has become much easier for potential home buyers, making it much harder to skew a home’s value one way or the other.
In addition, home buyers aren’t staying put for 30+ years after purchasing a new home anymore, making it harder to capitalize on higher appreciation values. In previous generations, it was fairly common practice to buy a home, live there for 30 years and pay off the mortgage over that entire duration. As a result, home owners would see a substantial increase in their property’s value since the time it was first purchased to the time they decided to sell 30+ years later.
Today’s generation is much different. People are bouncing around much more often than in years past, and when it comes to marriage and settling down—well, they’re waiting longer to cross the bridge as well. Because of this trend, it’s harder for home owners to enjoy the benefits of home appreciation because they’re simply not buying early enough, or not staying in the same home for a long period of time.
If you’re considering buying a new home or condo, real estate almost always makes for a great long-term investment, but if you’re not willing to commit to the same home for a seven to ten year period, don’t expect to see a dramatic increase in appreciation or value.
Myth 1: Working Directly with the Listing Agent Gets Buyers a Better Deal
Myth 2: Buyers Should Never Offer Full Price
Myth 3: Spring & Fall Are The Best Times to Buy
Myth 4: Always Leave Room For Negotiation After Inspections
Myth 5: A Buyer Must Put Down 20% to Secure a Loan
Myth 6: Buyers Needing a Loan Can't Compete with a Cash Buyer