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I have recently compiled year end statistics for the Plymouth Real Estate Market and have made some observation. The Media, The Realtor Associations', the Public, and even Realtors are making sweeping generalizations about the state of the Real Estate Market. People have tendency to make sweeping statements. First let's look at the MEDIA.
The Media has helped exacerbate the public's perception of the downward spiraling of the Real Estate market. I remember in 2005 the media describing the market as tanking and sales were down 1%. Like it or not the Media is in the business of selling papers and "Hype," especially with a negative spin sells lots of papers. 1999-2005 were record setting years. The reality of the REALTY is that 1% off a record year is pretty good! In fact 2006 was the 3rd best year in the last 20 years of our market in Minnesota. The Media fails to tell the public that Real Estate like any investment fluctuates like any market (like Wall Street.)
Consider this example: Joe buyer purchases his home for 270k in 2000. His home is worth 370k in 2006. In 2008 his home is now sells for 345k. Did Joe lose money? In reality he did not. Joe will net almost a 48k PROFIT after paying a 7% commission to sell his property for highest price a buyer will pay in this market.
His original investment was 62,000 (20% Down Payment & 3% Closing Costs) and his return on investment was 77.4% over 8 years or 9.6% a year TAX FREE! Unless Joe has a miracle worker for a Financial Planner, I highly doubt Joe could have had that return on Wall Street same time period. How is that losing money?
Now if Joe went and refinanced and bought himself vacations, cars, and clothing that has nothing to do with the value of his property, the fact he spent his equity. That has to do with Joe's fiscal choices that might not have been the wisest and fiscally responsible.
The Media never talks about the fact your home is still worth more than you paid for it 4 years ago. The problem is that everyone thought the Appreciation train would keep running at over 5% a year. And that is not in the world of Reality!
The Media only focuses on the cases of FISCAL IRRESPONSIBILITY & FISCAL INCOMPETICY due to consumer ignorance or lack of education and unfortunately Lack of Professionalism in the Mortgage & Real Estate industry.
