Looking At The Real Estate Market Ten Years From Now
By JD Esajian on January 22, 2014
Think about where you were five years ago. Short sales were becoming part of everyday life, the stock market had not yet taken off and you may have been established working in another field. Just a few years later, things have changed quite a bit. It is easy to live for now and focus solely on the present, especially when dealing with real estate. However; five, ten and even twenty years goes by much quicker than you realize and certainly want it to. It is important to keep this in mind when you are looking at your real estate portfolio.
The real estate market works in cycles. For the last 50 years or so, there have always been periods of highs complimented by periods of extreme lows. Anyone who was around during the 1980s can relate to what the real estate market just went through. Unless you are a real estate historian, you may not realize just how bad the market was during that time. Anyone with money, and a little foresight, took advantage of a seemingly hopeless market and positioned themselves quite nicely when the market finally turned around towards the end of the century. We may be going through a similar period now.
Just five short years ago, the market seemed hopeless. There was a seemingly endless supply of short sales and foreclosures. Some areas have already started to take off while others are slowly moving along. If you had bought during that time, you were certainly buying close to or at the bottom of the market. You may not have seen tremendous appreciation during that time, but you are now well positioned for the future. The market will eventually turn around, it always does. When that happens, you will have your choice of a few desirable options.
If you do not have a few long term holdings, your portfolio is not as strong as it needs to be. All of those homeowners who took equity out through refinancing or sold last decade were in that position. They bought years earlier and then took advantage of the market. It may not be exciting to net a small cash flow profit every month through rent, but what you don’t see is that you are gaining equity with every payment. If you own the property outright, you are still reaping the benefits of tax relief and waiting for the market to eventually turn around.
Five and ten years down the road seems like a long time, but it really isn’t. How many times have you seen a property or a situation and thought, “if I had only got involved years ago I would be sitting pretty today.” Well, years ago is right now. You may have missed the bottom of the market, but there are many good deals still available. For all of the talk about the market rebounding and recovering, we have only reached the tip of the iceberg. If history is any guide, we can expect a run on real estate to happen again in five to ten years. When that does happen, will you regret not buying more properties?