History can often be crystal clear

The real estate forecast is looking hopeful over the next five years, with slower but steady gains continuing.

As we head into a New Year, it's always a good idea to ponder the past. A quick glance into the rearview mirror before merging onto the fast lane of investing can keep you from crashing!

Realtors and lenders continually learn from the history of real estate trends to better advise their clients how to proceed. The graphs and charts I have included in this summary, will show what I am referring to.

San Diego Realtors have been able to track real estate sales through various ways, including the Multiple Listing Service, for the last 59 years. What this reveals is that homeowners have had the advantage of an average annual appreciation increase of 5.97 percent.

This is great news for those wondering if San Diego is a good investment. Fallbrook and Bonsall have also seen similar historical gains following suit with the rest of the county.

Cycles vary depending on other economic factors, so checking those side mirrors while navigating your real estate plan of action is crucial. Currently, we are coasting around a bend in the sales market. However, unlike times past, the forecast remains positive. Due to responsible lending practices, low inventory and increasing housing demands, homeowners are projected to still see appreciations over the next few years. Slower gains but still gains!

The key to your success will be to buy and hold for at least five years. This brings me to a question many renters are asking me today, “Should I wait until prices come down?” My answer to that is; “They may or may not, but one thing is almost certain, interest rates will rise!”

Rising interest rates will reduce your buying power dramatically, just like losing oil in your car affects your mileage efficiency. The chances that the median homes price will come down far enough to compensate the rate increases are slim.

As the other chart I’ve included shows, rents will continue to rise while a fixed rate mortgage payment will remain the same. This factor, along with appreciations and tax benefits, far outweigh the small savings in rent you may see today. After 10 years of homeownership, buying today’s median priced property of $636,000, you are likely to see your home’s value gain almost $400,000! My guess is renting for 10 years will not produce the same results.

I hope that this information helps you cruise down the Real Estate Highway safely!

Realtor Heidi Dickens, DRE#01268111, can be reached at (808) 265-9823 or Coldwell Banker Village Properties, 5256 S. Mission Road, Ste 310, Bonsall.

Charts-Data provided by: Skyline Home Loans-Jim Kabellis, MBS Highway-provides industry news and forecasts, MLS Data and the National Association of Realtors