By Mike Bodeen · 26 April 2021
Last week we discussed the record price appreciation year of 2005 which peaked at 47%. We noted the very similar paths of appreciation comparing our present year’s 4 months of appreciation (Jan-April) versus 2005. We also saw, based on the continuing lack of supply and current escrow pricing, that it’s quite possible that 2021 will surpass 2005’s 47% appreciation. We stated then, that we believe that will the case.
But does it matter?
Yes, it does matter – if you’re a real estate day trader! It matters little to none, if like stocks, you’re in it (home ownership) for the long haul. This week’s chart, which we like to drag out and dust off periodically helps with our perspective.
So even if you bought at the top of the market in 2005, you’re ahead of the game today.
If you bought the average priced (monthly average) home in May of 2001, you would have paid $173,000 for that home. The value of that home escalated to $352,000 in May of 2007 – a price rise of 103% in just 6 years. Wow!
Yea, but what about the hundreds of thousands of people who bought homes at the top of the market from 2005-2008 and saw their values plummet and remain bottomed out from 2008-2011? Indeed, that drop was significant, from the high of $352k to the low of $152k in August 2011 – a drop of $200,000 or 43%!
And guess what? As of March 2021, the average priced metro-Phoenix home hit a value of $470,000. (average, not median) So even if you bought at the top of the market in 2005, you’re ahead of the game today.
So, getting back to what matters. Whether you buy at the bottom, or top of the market, if you’re in your home for the long haul, you can just relax and enjoy your home. The ups and downs of the market won’t’ affect you. In the long run, like holding Microsoft or Costco stock, you won’t have to sweat the program, just keep enjoying your home. And that’s what homes are for.
In 20 years, you may have remodeled your home 2 or 3 times. Good for you! Keep doing so, especially if you have Home Depot stock😉