The Chief Economist for the National Association of REALTORS®, Dr. Lawrence Yun, has been making very positive statements lately. He is also saying all real estate is local. So exactly what does this mean for the real estate in Williamsburg, Virginia?
First let’s look at what Dr. Yun calls the power of leverage for Homeowners.
If you purchased a $200,000 home 10 years ago with a $10,000 down payment and it appreciated at a normal rate of 5%, your gain would be about $110,000. Where else can you get that type of return on your investment?
But is 5% gain achievable? Let’s look at the average sales price in Williamsburg area as reported by the Virginia Association of REALTORS®.
If we look at the year over year increase of average sales price from 1996 to 2003 you can see it averages out to 5%. We all know how prices sky rocketed in 2004, 2005, and 2006. The average sales price for 2007 as shown here is only from January to November. If we average the year over year increase from 1996 to 2007 it averages out to 6%.
If you bought a home in 1996 for $168,500 it would be worth about $288,000 today if it appreciated at 5% per year or $319,000 if it appreciated at 6%. The average sales price at the end of November in Williamsburg is $340,471. If my math is correct the average sales price is higher than what it would have been if properties in Williamsburg appreciated at a normal rate. The average sales price has actually more than doubled. An average buyer puts about 10% down payment so the initial investment was about $17,000. Not a bad return on investment, is it?
This could be our Christmas Gift this year. I like to wish you all a Merry Christmas.
Check out the video below for your Christmas laugh.
Al, Thank you for the specific graphs. Even if a person doesn’t live in your area, as I do not, it is pretty much the same everywhere. People need to understand that long-term real estate is a good investment. It always has been and probably always will be. I have discussed the same thing on my blog but without all of the great graphs and details. My blog specifically targets the Central Phoenix Real Estate market but as I said, it’s the same thing. Thanks again, Travis Schnepp