Treating your Home Like an Investment

There has been a lot of volatility in the market since COVID, record low interest rates, record inflation, and now much higher interest rates than most home buyers have seen in their life(our friends from the 70’s excluded).  Despite all this however, our feelings on the matter and what the news tells us are all very different then what the numbers tell us.  Here in the PNW we have had an average appreciation of 8.3% in median home prices since 2012, the end of the Great Recession.  Would you be shocked to learn that average appreciation thru COVID(Jan 2019 - Jan 2024) our market appreciation was 8.6%?  

“But wait!” you say, “I was told home prices skyrocketed during COVID!”  Well you were not lied to.  From January of 2021 to June of 2022 home prices jumped almost 20%.  From June of 2022 to January of 2023 home prices fell 18.5%.  Median price during the crash of ‘08-2012 was 33% but spread out over 5 years.  We lost more than half of that almost overnight(6 months).  From 2023 to 2024 our appreciation has been a modest 4.1%, all of this volatility to place us almost perfectly average with the last decade. 

What does all of this mean?  Well I am trying to cut thru the emotion of these numbers.  Right now so many people are waiting, wringing their hands, listening to the news, unsure of what to do.  For sellers, a lot of you are locked to a golden interest rate, it may not make sense to sell unless you have bigger goals to tackle vs securing housing and the long term investment of your home.  But if you are needing more space, to relocate, or whatever it may be, the house you want to buy is discounted right now.  This also means for buyers the homes you are looking at are also on sale.  The only reason prices normalized so quickly was the change in interest rates that reduced demand.  When that downward pressure is released with lower interest rates home prices will push back to their 2022 levels, quickly, and beyond them.  Do you want to pay 20% more for the house to get a better rate?  That increased cost of the home over 30 years of interest will cost you about 100k more then if you paid the higher interest rate upfront and refinanced it later.  It also doesn't count the lost equity over that time and the lost money spent on rent.  Winning in investing be it in your home, in real estate or in the markets, works over time, you need more time owning assets not less.