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The Real Estate Roller Coaster Rides On – Where You Sit Matters

Category: Retirement Real Estate

December 30, 2016 — Real estate in the last 15 years has been like an rollercoaster – cozy ups, terrifying downs, and hairpin turns. But like a great ‘coaster, the ride feels different depending on where you sit – those on the ends get the big thrills while middle riders enjoy a slightly smoother ride. That is the conclusion of The Wall St. Journal‘s recent analysis of the latest real estate prices from October’s S&P CoreLogic Case-Shiller National Home Price Index and other sources.

After dropping 27% from 2006 to 2012, average home prices rose 5.6% on the last 12 months, a record high (although not when counting inflation). But that is the national average, regional variations tell a significantly different story.

The Wall St. Journal reported that data from Weiss Analytics, a housing-data firm, indicates that zip codes where the median home was worth $500,000 to $1 million have dramatically outperformed less expensive markets – high prices areas are +103% vs. 16 years ago and +39% since the housing crash in 2006. Compare that to houses worth $100,000 to $150,000, which are only worth 16% more now than in 2000 and just 24% more than the most recent bust.

An Election Tale
The Journal also analyzed Zillow data. Using all these sources The Journal found a potential reason for soon to be President Trump’s election win. Urban coastal areas of the country (the end seats on the coaster if you will), which tended to vote for Clinton, have seen huge gains in the value of commercial real estate companies Denver since 2000 and since the real estate bust. By contrast the rural areas (the middle seats) that propelled the Trump victory are seeing real estate values that are essentially flat. Much of that difference comes from different economies – plenty of jobs and opportunities in the former and static to declining situations in the latter.

Bottom line
Topretirements can attest to the roller coaster changes in real estate prices since we started this site in 2006. At that time values were soaring with speculators buying multiple properties with the intent to flip. Prices changed faster than we could keep up. Then the market tanked and prices fell in some markets like Florida and Nevada to one third what they were prior to the crash. Since 2014 values have been soaring, there is more “flipping” going on, and it is hard to stay current with real estate prices in urban and coastal areas. Unfortunately, prices are changing very slowly in the hinterlands.

Here is the link to The Wall St. Journal article: “Housing Gains Highlight Economic Divide (might require paid subscription).

Comments? How have real estate values changed in the part of the country you live in – big changes or small? Do you think the market is about to top out again, or even go into speculative territory? Please share your experiences in the Comments section below.

Posted by Admin on December 29th, 2016


  1. I live in a condo in sandiego and purchased it for $58000 back in 1995. The value now is $230,000. Problem is if I sell the unit I would need to move to another state where homes are cheaper so I can have a nice retirement. I know this is a good time to sell, but wondering if it would be better to wait a few more years. Any suggestions?

    by areti11 — December 30, 2016

  2. Location matters a lot. In the DFW market, it is on fire because of the number of employers coming into the area. There is a shortage of homes and it is driving up prices. Apartments are also in short supply currently and rents are very high (for this market). I read recently that one in seven apartments under construction in the US is going up in the DFW area.

    On the other hand, we bought a high end condo in Galveston in 2006 when speculators were snapping up two or three at a time. We have been trying to sell the unit for 2 years now without a single offer. It is listed at more than $100K less that what we paid for it when new. The Galveston market is highly dependent on the oil sector and right now that sector is depressed. We can only hope that 2017 will be better for the energy producers so we can attract some buyers.

    by LS — December 30, 2016

  3. I agree, location is very important. For example in sandiego and the condo complex I live the condo’s are being sold in 30 days or less.

    by areti11 — December 31, 2016

  4. It will be interesting to see how the rising interest rates effect the market.

    by Florence — January 1, 2017

  5. The best way to go is by not having to take a mortgage. ….

    by areti11 — January 2, 2017

  6. Some people may want a mortgage for the interest write off, especially if the second downsizing home is less expensive than the first. Lots of retirees would rather save their nestegg and use other people’s money.

    by Staci — January 3, 2017

  7. I don’t know if that would work for me. My husband and I will be receiving only $14000 yearly on Social Security, that’s why we were thinking that paying cash for our downsized home would be a better idea. Is it still better to have a mortgage in our circumstances?

    by areti11 — January 4, 2017

  8. If I were still making mortgage payments I never would have retired because the truth of the matter is, the bank owns your home, not you. No amount of savings on my income tax is worth having that hanging over my head.

    by Alice — January 4, 2017

  9. areti11 look into a HECM. You can buy a house using equity in your current house and never have to make any payments. Then squirrel any extra money from the sale of the current home into the bank.

    by Louise — January 4, 2017

  10. When I was a working stiff, I made substantial principal payments on both our home and summer cottage and burned the mortgages (figure of speech, not really) after 12 years. A year and a half into retirement, we purchased a home that we are living in in retirement. I could have paid cash, but took out a mortgage instead. A few months ago, I refinanced the mortgage down to 2.75%. The factors that influenced this decision were: taking money out of an IRA is a taxable event and if you have no income you can’t put the money back into the IRA; I can pay off the mortgage at any time should my returns from my Vanguard account fall below that rate; my account is paying more than 2.75%. This being said, I have a strong affiliation with the debt free camp. As always, any advice may not fit your situation. You have to do the math and either educate yourself or consult with someone who can advise you. As the example above illustrates, the thinking will probably change in retirement. Hope this helps

    by Peter Campbell — January 7, 2017

  11. Our mortgage was paid off in 15 years, ironically the only type we qualified for at the time. It enabled my husband to contribute to a matching 401k. We’ve been thankful ever since. The question is now as we wonder about relocating should we use our or other people’s money. Peter made some good points and I remember my mom and dad always saying, “Use the interest, but hold on to the principle.” Wonder if that still applies in today’s economy??

    by Staci — January 8, 2017

  12. After we sell our condo in Cali and move to southern oregon….can’t decide if we should buy or rent at least until the home prices come down. Our condo has quadrupled in value in 20 yrs and don’t want to wait too long to sell but since the home prices in Cali continue to rise by 10% yearly and caregiving a mother who has dementia its a difficult decision for me….

    by mary11 — May 31, 2017

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