And second, mainstream media, you are wrong. People are continuing to buy and sell in upscale communities – such as the San Diego County coast, Orange County coast, Westside L.A., Silicon Valley, and Seattle – just as they always have, because business, outside the financial, real estate, and construction sectors, is booming. In addition, most of these upscale area homes are actually appreciating in price, not depreciating…again, just as they always have. To demonstrate this, we took a look at one community, La Jolla. The average price of a La Jolla house in 1977 was $118,700. In 1987, the average had jumped 409% to $485,900. In 1997, the average increased another 157% to $763,500. In 2007, the average price in La Jolla had appreciated another 315% to $2,408,900.
Conclusion: Detroit’s problems aren’t so much related
to real estate trends as they are to local factors. Detroit
and other areas like it should not be included in the
calculations for the national average.
Statistics sources: The Wall Street Journal and REBA.
The most important point to take away from this article is this: All real estate is local…and not just by city but by neighborhood.
Now let’s look at stocks versus real estate. Even stock market cheerleader The Wall Street Journal had this to say recently: “The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.”
Bottom line: Buying real estate in an upscale community is still your best investment. Homebuyers and sellers need to take a longer view; years, not months or days. Compare the lack of growth in stock prices with the growth displayed by La Jolla over the past decade.
La Jolla statistics provided by the La Jolla Real Estate Brokers’ Association (REBA)