Buying a home can be a proven and safe investment, over time!

By mark-slade August 9, 2011

The above graph shows us the US National Housing Trend since 1997 as posted by Zillow this morning. This chart was created to show us that June Marks Lowest Rate of Home Value Depreciation Since Start of Housing Recession
Posted: 08 Aug 2011 09:00 PM PDT

Home values in June fell 0.08% relative to May levels and fell 6.2% relative to June 2010 levels (see Figures 1 and 2). This is the lowest depreciation rate nationally since the start of the housing recession in June 2006. Let’s start with the positive interpretation aspects of this development. First, we’re seeing this improving performance (decreasing depreciation) in a period devoid of tax credits.

This casts the data in a fundamentally different light than the period between October 2008 and July 2009 when we last saw such a strong improvement in depreciation rates. This improvement was, of course, largely courtesy of both federal home buyer tax credits and large-scale foreclosure moratoriums. So, in that context, we should feel pretty good about the current numbers.

But, as a Economic trained Realtor, what i think is most telling about this graph is the direction that it depicts for us on Housing Valuation Trend: in the past 14 years, The Housing Value Index has climbed 71.6%; while certainly we can lose sight of what the index depicts in June 2006–a 140% increase–we are still left with a very healthy rate of return. In fact, this index climb equates to an average annual increase of just over 5%.

So, for any Buyers out there that are nervous about buying a home, i suggest you rest easier knowing that even after erasing the tremendous gains from 2000-2006, you would still be in a healthy place if you owned a home from 1997. Ironically, this reminds me of when i was selling my Coop in Park Slope Brooklyn in the early 90’s, after seeing values almost triple in our building from 1984-1989, we ended up having to sell for a much less advantageous price that netted us only double what we paid (i say this not to mock the success this investment was, but to put into context how so many people feel about using their homes as investments) rather than triple the price paid if we could have sold it just a year or two earlier.

If you are looking for properties to call home and use as your single largest investment, i cover Hoboken, Jersey City,as well as Essex and Union Counties in NJ.

Mark Slade
Keller Williams