The Cyclical Nature of Real Estate Illustrated.

Hi there. In this post I’m going to explore the history of a couple of recent foreclosures (REOs) that have just been placed under contract (pending). I figure this little exercise will give you some incite on the cyclical nature of real estate and property values. 

Both of these properties were sold by me, prior to opening up Tutas Towne Realty, 10 years ago. 1901 Evergreen Ct

The first one is a 3 bedroom 2 bath pool home with 1670 sq ft of living area built in 1991 and sits on a ½ acre lot. 

I met the original owner of this house back in 1995. He lived in England and this house was used as a vacation home. He built the house in 1991 and paid $95,000. It has since had 5 owners including Countrywide Mortgage who now owns the property. Let’s check out the sales history. 

SOLD

PRICE

% CHANGE
SALE – SALE

17 YEAR CHANGE

NEW 1991

$ 95,000

N.A.

 

1996

$ 98,000

+ 3%

 

2002

$ 154,000

+ 56%

 

2005

$ 275,000

+ 44%

 

2006

$ 300,000

+ 9%

 

2008

$ 153,900

(- 49%)

+ 62%

 Wow! Isn’t that interesting? In 17 years this property has increased in value by 62%. That’s pretty darn good. 

114 Whitehall WayNow let’s check out another one. This house was built in 1991 and is a 3 bedroom 3 bath with 1644 sq ft and a pool on a standard size lot. 

The original owner of this property was also from England and I met her in 1996. She paid $87,900 for this property when she had it built. 

It’s had 4 owners including Bear Stearns who owns it now and is also currently under contract. Here’s the sales history. 

 

SOLD

PRICE

% CHANGE
SALE – SALE

17 YEAR CHANGE

1991

$ 87,900

 

 

1997

$ 82,900

(- 6%)

 

2006

$ 232,000

+ 180%

 

2008

$ 114,900

( -50%)

+31%

This one didn’t fare as well as the first one. It only increased by 31% over 17 years. But look at what happened between 1997 and 2006. Holy crap!!! A 180% increase!!! That’s incredible. 

These charts show you that during the 90s values barely increased if at all. This was a down cycle. Then, from about 2000 to 2006, values sky rocketed. Now we are back in a down market. 

The big question is…will it last 10 years like the last one? Maybe. If that’s the case then we are looking at 2016 before we hit the next big upswing in values. OR was 2001-2006 just an anomaly? 

What do you think? 

NOTE: Real Estate markets are very local. This report is based on data specific to Poinciana FL. Also, the 2008 sales data is based on a pending price not a sales price, so the percentages will vary slightly.

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