Charts are a terrific tool for visualizing trends, long term or short. I am looking at these 3 charts as a tool in showing how real estate may go over time, especially in comparison to stocks and bonds. The top chart shows a general REIT index in its 2 year cycle (note: it's not easy to chart a national trend, so this chart is a good representation of general, nation real estate pricing). After an obvious, sustained fall, prices in the chart are just starting to break out of the range of 4.8% to 2%, yields are now in the middle of the range: around 3.3%. They are showing a recovery from the intentionally shocking time during the 2008 financial crisis. Rates are still relatively low, which bodes well for real estate investors looking for, and hopefully qualifying for, loans. The third chart is of the S&P 500 index. This is the best chart for looking at stock prices as it is much more comprehensive than the DJIA. The chart shows it current range of around 700 to its current place over 1000. This is around a 40% recovery off the bottom
My point is that as an investor, I don't like to buy the high or sell the low. The biggest problem is determining when you are experiencing them. As we recover from the financial shock of the past year, these charts make an excellent case for real estate investment. Bonds and stocks have already made recoveries off their lows. I like to wait for pullbacks before putting money to work in a recovering market. Bond yields are at very reasonable prices which translate to around 5% for a mid-range 30 year fixed loan. This coupled with real estate values still being at their lowest levels in years, makes a case for a real estate investment rather then putting money into stocks and bonds. The first chart shows just the beginning of a bounce off the lows, exactly the time I like to invest, since it shows that a recovery is well under way.
So, I think it's a good time to consider investing. The values in the Crested Butte market are in line with the REIT chart, they have come down considerably in the past few years, and second home markets haven't seemed to experience the same bounce that primary home markets have experienced lately. We are through the summer, but I feel it is just the beginning. After all, charts don't lie.
My point is that as an investor, I don't like to buy the high or sell the low. The biggest problem is determining when you are experiencing them. As we recover from the financial shock of the past year, these charts make an excellent case for real estate investment. Bonds and stocks have already made recoveries off their lows. I like to wait for pullbacks before putting money to work in a recovering market. Bond yields are at very reasonable prices which translate to around 5% for a mid-range 30 year fixed loan. This coupled with real estate values still being at their lowest levels in years, makes a case for a real estate investment rather then putting money into stocks and bonds. The first chart shows just the beginning of a bounce off the lows, exactly the time I like to invest, since it shows that a recovery is well under way.
So, I think it's a good time to consider investing. The values in the Crested Butte market are in line with the REIT chart, they have come down considerably in the past few years, and second home markets haven't seemed to experience the same bounce that primary home markets have experienced lately. We are through the summer, but I feel it is just the beginning. After all, charts don't lie.
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