Real Estate can be a great investment with unusual appreciation. We have just completed two or three years of 20% – %40 per year appreciation in some of the beach areas. We are still having great appreciation, perhaps as much as 20% in some areas. But, it is not as extensive nor as much as it was. Real Estate as an investment can be fairly good over the long term; it has been in this area. However, there can be long periods when it does not go up in value much, if at all. In our area here, the appreciation on residential real estate as an investment was flat from 1987 to 1998 in most areas. In some areas, for instance 10 miles away from the beaches, some real estate actually went down in value by as much as 60% from 1990 to 1999. Another problem with real estate is that it is not liquid, that is, it is not easy to convert to cash, like stocks, bonds, and savings accounts are. Real estate is particularly non-liquid during a downturn in our markets. You will not likely hear this anywhere else, especially from other Realtors, but real estate is not a great investment, it is usually a good investment but not always, and not all the time. There has been an exception from about 1998 or 1999 to present, it is Sept. 2004 as I write this. Since 1999 or a little before, we have experienced an annual rate of appreciation in the Delaware Beach areas of 20%, 25%, 30% and sometimes more, PER YEAR! This is phenomenal and there is getting to be the idea that this will continue forever! I think it may continue for several more years, at a rate closer to 15% per year… but that is just a very informed opinion. The reason is that rates seem to be, being KEPT low, for various national reasons. And, the Baby Boomers are retiring – many of them know that Delaware is perhaps the best place in the world to retire, because of low taxes and great quality of life.
Too many people buy real estate as an investment and forget that there are other reasons to buy. I suggest that you will be much happier if you purchase real estate for lifestyle rather than as an investment, when it comes to your place of residence or your second home which should be almost entirely about lifestyle. After all, a second home should be a place to enjoy a lifestyle that allows you to relax and wind down from the rest of life.
If you live a very public life, one where people are always seeking you out, where you are always in the light of public scrutiny and often in the press for instance. If your normal life is one where you must always been on your best behavior and always crafting each word and action for it’s best value – then perhaps a private place, away from others, a place where you don’t know your neighbors, is just right for you. For instance Hunter’s Point is a place where each home is so private that in most cases you could be a nudist, have the drapes open and none of your neighbors would ever know.
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