Real Estate As Retirement Investment
Many of you don’t realize how lucky your grandparents/parents were in the 1970s. They were able to purchase a much bigger home than the one you have now, with a much bigger property, but for a much lower price than you would pay today. Are any of you wondering how this was possible? Well let me tell you how! You see, the average house in 1975 would sell for $57,581. After 1975 the price for an average home increased by almost $5,000 a year and in ten years the price almost doubled! The market inflated until 1989 when the average house would eventually sell for $273,698. So, if you would have bought a house in 1975 and sold it in 1989 you would have made more than $200,000 just for living in the house for 14 years. Just imagine if you had bought more than one house, lived in one of them, and rented the other, you could be rich! If only our ancestors were more aware of the housing market and inflation, even we their grandchildren could be benefiting from their success.
Unfortunately the housing market does not always go up which is what happened from 1989 to 1996. A recession hit and not only did the stock market drop, but so did the housing market. As less people started buying homes the average price of a home dropped. In 6 years the price of a home dropped about $75,548 and was only worth $198,150 in 1996. Even though many people lost thousands and thousands of dollars, it was an opportunity for the educated investor to make money. If you are wondering how that could be, let me explain. Usually during the time of recession people are unable to afford their homes, therefore they are forced to sell at a very cheap price. Since they need to sell their house, these families need a place to rent until they are comfortable enough to purchase a home. Therefore you might not have to “give” your home away for such a cheap price, instead you might have been able to have someone renting out a part of your house to help you pay your bills.
As the years go by, the markets would eventually begin to inflate because people start to have more money to spend. Eventually more and more people would have the sufficient funds to purchase a home and therefore would begin the process. As more people have extra cash to spend, stock markets inflate, and so do the housing markets. Therefore this would make it a good time to either not sell or to buy more so that you can invest later.
After 1996 the average price for a house went through the roof. In only eleven years the amount almost doubled. The price increased for another year when it finally reached $379,347 in 2008. This goes to show that many of the best ways to make money can be in time of recession.
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The above information is provided as a guideline and is not intended to give a professional legal advice. Please consult a real estate lawyer for their opinion on your particular case
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