Real Estate Agents should always be up-to-date on the current real-estate market trends and house prices. Real Estate Agent and Trainer, Robert Rico, discusses the current Real Estate market, and uses statistics from the past to support his theories. Do you want to see more video blogs? Subscribe here!
Many people want to know what the current condition of the real estate market is in 2017. Are property values increasing or declining? Is it the right time to buy or sell? Will property values continue to increase, or have we come to the end of our real estate rainbow?
By researching the real estate market, we are provided with a better understanding of the real estate patterns and can possibly anticipate what type of market awaits us. We can begin to do so by taking a look at a time when properties held modest values, in 1968. In 1968 median home prices in Los Angeles, CA were $23,120. As of 2015, the median home price in Los Angeles rose to $475,000!
How did this substantial increase occur? The answer lies in the cycles of real estate. The real estate market typically consists of a boom and bust cycle, or what we call a “bull” market (a real estate market in which values are rising) and a “bear” market (a real estate market in which prices are falling).
From 1975 to the present, there have been 4 real estate cycles in Los Angeles. The first cycle was a bull market that lasted from 1975 to 1980. During this time period home prices increased a whopping 69% in Los Angeles!
However, as we mentioned earlier, this is a cycle, which suggests that what goes up must come down. A bear market soon followed and from 1980 through 1984, home values decreased by 9%. Although this wasn’t a huge drop, it put a halt to the magnificent increase from the prior years.
A bull market returned and from 1984 through 1989, home values increased substantially once again at 67%! This was followed by a bear market in which there was a 37% drop from 1990 to 1997.
A third real estate cycle took place in 1997 and it was spectacular! From 1997 to 2006, home prices increased 166%! This increase in value was financially rewarding for a surmountable amount of homeowners. Homebuyers and investors who purchased properties during the early phase of the of this era watched their properties values balloon during this time frame. These people had the potential of becoming millionaires if they had purchased several properties at the beginning of the cycle and sold at the peak of the cycle.
Then again, we know that what goes up must come down! In 2007, that’s exactly what occurred. The real estate world and the lending industry came crashing down rather quickly and several homeowners were forced into a foreclosure due to the sudden and unexpected drop in property values. Between 2007 to 2012 housing prices dropped a dramatic 43%! In many areas, house prices were virtually cut in half.
So that brings us to our most recent real estate cycle. Since 2012, property values have increased 27% and continue to increase. The current median price for a home in California is $509,000, according to the most recent statistics taken from the CA Association of Realtors.
And to illustrate more recent matters, home prices went up 4% in just one year– from December 2015 to December 2016.
This brings us right back to our initial question, will the real estate market continue to increase? Will it halt and decrease anytime soon? Is it the right time to buy or sell? The only certain way to predict the future of the real estate world would be if we held a crystal ball and looked deeply into its’ mystic powers. Unfortunately, this is never an option.
What we can predict, however, is that real estate cycles exist, and according to history, a change may be brewing..
We encourage you to do your own research and determine when you think would the best time to buy or sell a home.