According to Census records between 1940 and 2000 and national real estate sales statistics through the spring of 2010, median home worth from the United States more than quadrupled over the past 70 years. Including data from the housing recession which started in 2007. While nations on the two coasts accounted for the majority of the growth, every nation showed gains in every decade.
Home Price Figures
Adjusted to year 2000 dollars, the U.S. median house price in 1940 was $30,600. By 1960 it had almost doubled to $58,600. By 2000 it had climbed back to just under $120,000. Over the long term, then, housing has an indisputable record of strong appreciation. Even in locations where costs traditionally have been lower this is the case. In New Mexico, for instance, in 1940 the median house price was just $6,800. In 2000, in $108,100, it was below the national median, however, the percent growth in appreciation over those six decades beat the national average soundly.
Historic Turning Points
In an overall upward appreciation trend, housing costs have shown determined swings in both directions. Nobody knows for certain when markets will turn. Yale economics professor Robert Shiller, co-creater of this Case-Shiller Home Price Index–the weakest of the house admiration trackers–writes just that”it’s apparent that the housing market goes through long intervals of either steadily increasing or steadily decreasing home price inflation, and that these periods have ended rather abruptly.” Significant turning points have happened at the start of the stock exchange crash in the late 1920s, in the start of World War II, in the close of the 1980s and most recently beginning in 2007. At every turning point there have been other economic and political facets changing too, but none stood out in such a way as to predict the housing flip.
Geography
Real estate is all about location. Understanding both population and job concentrations focus mostly on urban areas on both coasts helps you understand a lot about housing costs and appreciation. Although innumerable factors, both economic and psychological, impact housing costs, the basic principle of demand and supply is key. More jobs, more people and less developable land translate into higher housing rates. As population and jobs centers move, housing costs vary.
Effects of Inflation
Home is known as a hedge against inflation. When inflation rises, the cost of products, including housing, rises. If your wages stay the same, however inflation goes up, your ability to consume goes down as your salary are, efficiently, worth . If you own a house, it will go up in price with, or at least influenced by, the rate of inflation. The relationship between housing and inflation is somewhat muddled, however, because some component of appreciation is also linked to interest rates and interest rates also typically rise in time of increasing inflation. If interest rates climb too high, customers become priced out of this housing marketplace. Without buyers, housing costs fall.
Effects of Leverage
Housing appreciation of 5% is more valuable than the exact same rate of growth for other assets such as stocks. This is because housing appreciation is dependent upon the value of the house, not in your investment in the house. If you invest $100,000 in a down payment on a $500,000 house and its market value appreciates 5 percent, you’d get $25,000. If you invest the same $100,000 in stocks and they go up in value by 5%, you’d earn $5,000.