If only Nostradamus was a Realtor in Reno

Making predictions have always been a controversial subject.  Few can rival the great predictions Nostradamus (wiki) has been known to make on numerous world events.  If only he was an agent here in Reno.  But fear not, there is an alternative (As you have probably noticed from our previous posts ) It's the history of the market. History will always be the better teacher of the future.

A wise, seventy two year old friend of mine commenting on my seemingly lack of passion in learning history(and I thought I was already a good student) , bluntly told me " Ian, you're at a big loss in your lack of knowledge of history, how can you see what the future holds if you don't study the past?" 

He hurt my feelings but I knew exactly what he meant.

When it comes to predicting our real estate market  it's either win big (joy)
or lose big (grief).   We may not be aware of it but deep inside we have our biases of
what the future holds-our little predictions.  There are many reasons for this, maybe we overheard a good friend telling us what they heard from the news that the market will rebound by 2008.   Or by  constantly being bombarded by our industry's (often times) blind faith advertising,' Now is the time to buy!' 

One prediction that I often hear is this...

Myth number two: After the real estate market reaches it's bottom, it will go up at the same or similar pace as it did from the incredible increase in the previous years, 'the happy years' of 2002-2005 (15-30% home appreciation every year).  It just isn't so.  Basing it from previous records of the market,  I don't think this is going to happen.

After the honeymoon years of 2002-2005 (15-30% home appreciation every year)

market drops to arguably the worst real estate market since the great depression(2006 to who knows? CNN said 2009; I think that's fairly accurate).  After that (once we reach the bottom),it is safe to conclude that for a number of years (my guess is 3-5 years or more) the real estate market will appreciate just like what it did before to a more conservative 4-7% per year.

What's your point Ian?: After the real estate market bottoms out,history tells us that the market tends to move sideways (4-7% home appreciation/year) for a good number of years before increasing to more than 7%.  This is the time where it really makes sense to keep your home for the long term.

I still believe that every family deserve a home but make sure that you're making the best possible,well-thought out decision.  Feel free to call us if you need more information.