Quote:JT real estate question you think prices will ever hit pre 2008 prices? My sister is 40k upside down on a house she bought in 06 is there any hope?

First, to answer your question, yes, at some point. Simply because forever is a long time. But I don't think that is what you are asking. How long will it take is probably what you want to know. To answer that we will need to do some predicting. As I factually mention in my song, we have seen just over a 20% increase since 2012. It is a pretty large number over 3 years. How much of it was a correction to a market which bottomed out and encouraged investors to come back into the market? Well, we saw a huge spike in large investing companies (talking about companies buying hundreds and even thousands of homes) during 2012 and 2013 in Jacksonville and the surrounding areas. As the investors started to slow down we went to a more normal progression of 4.4% increase in average price in 2014. Home sales in a generally healthy market should be 3-5% just depending. So for this, lets use 4% to predict things out.


It is pretty unbelievable how high prices went in 2006. I'll use around an average (eye ball as they didn't keep as detailed stats in those days). It topped out around $270,000 for the average home in Jacksonville which was around May of 2006. On average for the year we will use $255,000. As of January 2015 the average priced home was $189,018. But January's average price is lower than the yearly average price (and January of 2015 is 6.1% higher than January of 2014). So again for example purposes we will use $201,000 since that is about the year average. At 4% increase this is about how long it'll take for your sister to break even (not factoring in principal payment):


2015 - $209,040

2016 - $217,401

2017 - $226,097

2018 - $235,140

2019 - $244,545

2020 - $254,326


For this very simplistic example, she would be looking around 2020 for her home to reach 2006 pricing. I'm not sure if that is good news or bad news. Could we see a higher return than 4%? Sure, but anything more than 5% we will probably be outpacing income and go right back to where we were. I will say though this year has been much busier than the start of 2014 and it feels like we may see a bigger appreciation than last year.

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