Not every real estate market purchase has to be an investment.
(I’ll use my ex-business partner to frame this story).
When I began buying real estate back in 1996 he said I was crazy. He said prices had a long way to fall and that real estate was “out of favor.”
I went on to acquire 6 apartment buildings over the next 6 years while his narrative remained the same. In fact, he’s been able to convince himself the last 29 years that real estate prices are too high. In summary, he never purchased a home but instead, rented all these years.
Since 1942, real estate has been on an upward path with prices rising in all but 7 years. In those 7, the only down years were 1990, 1991, and 2007 to 2011. In other words, the real estate market has been a winning investment 84% of those years. Look for yourself:
But the real estate market is cyclical. Meaning, some of those years, prices went up 1%, while others went up 16% or more.
In a recent essay by realtor.com, they discuss important perspectives about today’s real estate market – how long you’ll need to stay in your house to break even.
Here are some details from the essay:
“Stubborn mortgage rates, high transaction costs, and slipping home prices are threatening to extend the time it takes to recoup your costs.
… Buying a home is about both finances and lifestyle. Beyond appreciation, it offers stability, equity growth, and tax benefits.
In today’s market, buyers should consider whether they’re prepared to stay put for a bit longer than was previously required to break even.
There are equity headwinds for 2025 buyers: Slowing appreciation. High transaction costs. Slipping home prices.
Given these challenges, the estimated break-even timeline for buyers in 2025 may be as long as 10 years.”
May be. That, of course, depends on where you buy.
You see, not every real estate market is the same. Each real estate market ebbs and flows. They zig-zag. While Miami is the hottest real estate market on earth, Rochester, MN, isn’t. And that will one day change.
The same goes for Florida. One city may have seen staggering appreciation gains, while another flat-lined. Then digging deeper into my foxhole, look at Delray Beach. The greater Delray Beach real estate market saw single digit gains per year over the last five years, while downtown Delray saw double digit gains.
We may be entering a time when it takes longer for you to see price appreciation. But in the meantime, you’ll be enjoying the home you choose for years to come.
Remember, if the home you choose to buy does not generate cashflow, it’s not a true investment. So if you’re buying, anticipating appreciation gains, that’s not investing… that’s speculation.
Before you buy, it’s important to know why, and what you expect to gain from ownership. Is it for enjoyment in a place you love and waited years for it to come true? Or, is it for generating yield on your money invested.
Buying in the real estate market is not always about investing… it’s also about enjoying a place you love.
(Main Photo: Delray Beach Intracoastal luxury boating lifestyle…)
—————————————————
*** Earth Day was yesterday. How did you celebrate it? It’s still Earth Month so you have time to learn and take action
*** I’m enamored with Bamboo. Sustainable Bamboo flooring in particular. Did you know Bamboo is one of the fastest growing plants on earth. That makes it sustainable. So if you’re thinking of replacing your floor with wood options, consider Bamboo
*** If you’re thinking of selling or buying throughout Palm Beach County, my team is here to serve. Get to know these fine agents in an area you love
——————————————-
*** South Florida Real Estate Market Inventory is ABOVE 2019***
Last week’s supply was 63,497
Today’s supply is 63,712
Supply was UP 219 units last week
*** That’s a rise of 10,474 or 19% in 2025 ***
