Friday, October 06, 2006
Real Estate: The Next 10 Years
What will real estate do in the next 5 years? Everyone is very scared right nowabout the value of real estate. In some markets, the prices are declining. Insome of the markets that have had great job advances and moderate real estateincreases over the past several years, prices are moving up and homes areselling. I've always said that the stock market and real estate are negativelycorrelated. This means that stocks are booming now, while real estate isn't(nationally).I expect most markets to go through about six more months of inventoryincreases; in some cases and sectors, pricing may decline 2-6 percent. Byenlarge, the declines will be more than compensated by a boom that will followin 24-30 months (mid-late 2008). The Boomers are going to be retiring andmoving. The Housing starts are falling significantly and the commmercial marketis still moving forward. As more immigration occurs, the population ages andmore home health care for elderly becomes a norm instead of an exception, thereal estate market will again be tight and supply will decline. This willresult in a moderate to high price increase in several southern market segmentsfor a 3-5 year period.This spells a healthy return for buyers, buying right - and buying right now.Selling, now is not the option. Holding and renting your property will give youshort term tax benefits/savings and provide for a wealth of appreciation in themid-term.Getting it right, means buying low and selling high. Buy low now, negotiate foreverything and sell in late 2008 through 2010. But don't get caught on the nextdownturn. Recognize the fact that when your hairdresser is giving real estateadvice after a 2-3 year market boom (the next time), our current market iscoming again!
