The stock market has given me indigestion over the last several years. In 2008 when we had the worst economy that we have seen in our lives, the market crashed and small local and large national banks went out of business. What did real estate do during that time? Prices dropped 2.2% nationally and were more or less stable locally for single-family homes. Earlier this year in February, the Dow Jones dropped about 4% in one day – one never knows day to day what it will be doing in the next 24 hours. Real estate prices in Northern Colorado have continued to rise at around 8% this year according our local statisticians. This is higher than normal as prices have risen on the average about 5% during the last 10 years.
Sleeping Well at Night in NoCo
When I look at my stock market portfolio and compare it to the investment I have in real estate, I am far more comfortable with my real estate holdings. We purchased our home in 2010 for $313,600. Today, based on several online estimates and comparative properties I have looked at in the MLS system, its current estimated worth is around $515,000 - other properties, especially moderately priced rental properties, have increased like this as well. Our home has grown steadily in value and I feel confident it will hold its value – increasing proportionately along with other property in the unique NoCo market.
The average rate of return on what I consider to be conservative mutual funds has been around 4.67% for the last 20 years. The stock market in general has provided about a 10% return historically. But, if the market drops precipitously like it did in 2008, and you need to draw monthly income off your investments, you might never recover a significant portion of the money you lost because of these withdrawals associated with devalued stock investments. The long term outlook for real estate investment in NoCo remains very positive.
Current economic conditions are pushing interest rates up, so now is a great time to think about investing in real estate. You will sleep better at night if you do. We can help you with that – please contact us.