By most indicators, the national real estate market is looking up. There are lots of reasons for this and we’ll get into some of them here. But for the most part, the real estate market follows the general state of the economy. When employment is high and the economy is on a strengthening trend, buyer confidence is naturally strong.
It is also the case that a reduction in the number of foreclosures and short sales is boosting the general market; as these properties are absorbed, buyers turn to the regular inventory. Of course, continuing low interest rates have played a part in the upturn as well.
Some other factors are also in play. There has been a shift in the marketplace as multinational corporations have relocated to lower cost regions like the Midwest. This harbingers a trend away from the high tax, high cost states into these formerly less attractive markets. Another factor is the resurgence of American energy thanks to new oil extraction technologies, bringing a boon to such states as North Dakota, Oklahoma and Michigan.
With all this in mind, it’s interesting to have a look at the states and neighborhoods enjoying the highest appreciation in real estate values. A recent online real estate magazine, BiggerPockets, came up with the top cities undergoing year-to-year rapid appreciation. They were No. 1, Detroit at 32 percent, Toledo, Ohio at 23 percent, Dayton, Ohio at 20 percent, Modesto, Calif. at 18 percent, Houston, Texas at 16 percent, Atlanta at 15 percent, Chicago at 13 percent and Miami, Fla. also at 13 percent.
When we look at real estate appreciation charts across the U.S., over periods of time, i.e. the last quarter, last year, last five and 10 years, the patterns are evident. As the period of time becomes longer, the discrepancies between area and individual states tend to level out. Some examples:
Real estate appreciation in California in the last quarter was 2.7 percent; in the last year a healthy 14.3 percent; last five at 16.35 percent but over the last 10 at only 9.1 percent. Compare this to New York where the last quarter saw a 1.13 percent increase, the last year 2.36 percent, and the last five a definitive minus 3.59 percent. But when we look at New York over the last 10 years, the appreciation was 12.76 percent. Checking this against one of the lowest performing states in the last year, Alabama, we see the same trend: a negative .31 percent in the last quarter, negative .96 percent in the last year but over 10 years, a 14.29 percent increase.
What does this all mean? It means than over the short run, there are areas that become hot for one reason or another, climate, employment, tax criteria, etc., but over time, investments in real estate tend to level out. This is similar to investments in stocks and other investment entities.
But no matter, the news is good all around. The United States economy is on the way up and real estate is coming along for the ride. It’s a good time to invest, sell and buy, wherever your heart, job and pocketbook will take you.
