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FMLS Helps Keep Housing Market In Perspective

Email the Author: Brad Nix, Managing+Broker
Posted: November 19th, 2007
Category: real estate news



As a member of FMLS (First Multiple Listing Service), I receive their monthly email newsletter (e-news).  Most of the time it includes information about system upgrades, employees charity events, and training opportunities.  However, this month it included a very interesting article about "Keeping Perspective".  I found it as a good reminder to many agents, buyers and sellers.  Here an excerpt from FMLS e-news:

"The truth is, there is still plenty of good news on the Georgia real estate market.  When we hear consumers echoing the negative media reports, let’s also consider sharing the following facts:

  • Interest rates remain at historic lows; today’s consumers are not battling the interest (or inflation) rates of the 1970s and 1980s.
  • Conventional financing remains available to many, and FHA loans are on the rise.
  • The value of a home typically doubles every 10 years, on average.  How’s that for a return on investment?
  • Over the past 30 years, homes have appreciated an average of 6.6% per year, more than any savings account interest rate, and more than most CDs or other investment vehicles.  And the return on the actual initial investment is even more significant when you consider that most homeowners invest only a small fraction of their home’s total value in their down payment.  That’s the power of leverage.
  • The average homeowner today holds 36 times the wealth of the average renter.  Why?  Keep reading below…
  • 60% of the average homeowner’s wealth rests in their home’s equity.  Homeowners who look at home ownership as a long-term proposition are the homeowners who most reliably build equity.  So putting down roots with home ownership can be the most important step in building your financial foundation.
  • Home equity is the largest single source of wealth for most Americans.
  • A house becomes a home… and that’s more than an investment: it’s a way to enjoy your life, and provide a stable environment for your loved ones."

Good points and stats for all of us to consider while being constantly bombarded with negative media reports.  Remember the old adage in reporting…"If it bleeds, it leads!"

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  1. Alpharetta Real Estate November 25th, 2007 at 11:43 pm

    Brad: thanks for sharing this “good news” on the Atlanta housing market. I didn’t know that statistic that over 30 years, atlanta real estate has appreciated and average of 6.6% per year. I get asked that a lot by out of town buyers looking to relocate to Alpharetta and North Fulton. I’ve crunched a lot of sales data and most of my numbers show anywhere from 3% to 7% per year appreciation. It is good to see fmls go on the record on this. My analysis hasn’t gone back that far.

    The bottom line is that Atlanta real estate hasn’t experienced the huge increased that some other cities have and so, while our highs haven’t been as high, our lows aren’t as low either.

    I have seen a flattening in prices though, during the last year or so. Some neighborhoods are actually losing a bit of value. What is so putting so many families in financial straits is exactly what your post notes: so much of their wealth is in the equity of their home and when that goes down it make a big impact on their overall financial position.

    I look at house equity a little bit like stock options…on paper you look rich, but until you actually sell (the stock or the house), you’re not actually rich ;->

  2. dean guadagni November 26th, 2007 at 2:34 pm

    Brad,

    I was clued into your blog by a close friend Pat Kitano of transparentre.com. You have a solid team and a great looking site in place!

    As for your line “If it bleeds, it leads” nothing can be more disturbingly true than that statement.

    Here in San Francisco, the number of “micro” markets that are thriving with multiple offers is always ignored. Instead we are bombarded with Stockton’s foreclosure nightmare and every down trending statistic that the mass media can get their hands on to report.

    Nice job Brad and thanks for peaking in on deansguide!

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