Tuesday, May 02, 2006

Consistent home price growth since 1950

Because we're a business operating within the real estate industry, we get a lot of questions about whether or not there's a housing bubble.

To help see into the future, we can take a good look at the past. According to sources including Freddie Mac, home prices have appreciated every year since 1950. The average annual appreciation during that time is 4.8%. That time period spans eight recessions, and still home prices have increased every year. The lowest annual appreciation during that time was a little more than 1%, back in 1964.

Other helpful factors indicating a continued healthy market:

Growing national homeownership rates (69% in 2005 vs. 64% in 2001)

An expected increase in US households of more than 13 million over the next 10 years (more than 12% growth from the current 108 million, according to a Harvard University study)

Homes are still more affordable today than twenty years ago, according to the National Association of Realtors Housing Affordability Index (affordability index of 123 in 2005, up from 95 in 1985)