Just to put a little sanity back into things, here's an example of how prices don't always go up.
I used to own a 3 bedroom/2bath condo with a garage in Crofton, MD. Roughly 1250 square feet.
The guy who had it before me paid $78,000 for it in 1988, when prices were on the rise.
In 1990 another nearby unit, a smaller 2 br/1 ba with 945 square feet sold for $91,000. Mine would have probably fetched $95K or a bit more.
I bought the place in December 1994, for $84K. He had been asking $86.5K. A few months later, a similar one sold for $85K, and that's about where they stayed for awhile. For several years, if I had to sell, I would have had to bring money to the table once you factored in the realtor's commission, etc..
I refinanced in the summer of 1999, and the place appraised for $92.5K. In july of 2001, the unit that sold for $85K re-sold for $100.5K. That was the point I really started getting excited, once values started breaking the 6-digit barrier. At that point I was thinking that when I did finally sell, I might finally walk away with a bit of money for a down payment on another place!
By 2002 a unit like mine would've probably gone for around $120-125K. By 2003 it was more like $140-145K, maybe even $149K for a really nice one.
In June 2004, the unit like mine that previously sold for $85K and then $100.5K sold again for $152K. By that time I was no longer living in mine, and ran into problems with the guy who was rennovating it, so it ended up sitting for awhile. That turned out in my favor, though. Initially, the agent said I'd be looking at $155-160K earlier in the year, but by the time it went on the market in October 2004, we were asking something like $186K. I ultimately let it go for $185K, which is the most the buyer's lender would allow on the place. It was starting to get late in the year, and winter would soon be setting in, and I didn't want the place to sit empty for too long especially after all the remodeling work I did, so I just wanted it off of my back.
By the summer of 2005, a place like that would've gone for about $240K, and even today I see them asking around $240-250K. They're sitting on the market alot longer though, and there had to be a ceiling somewhere.
Also, condo fees had been rising. When I bought mine, the fee was $120 per month. By the time I sold it was $239. I don't think they raised it the following year, but I kept in touch with some of my neighbors there, and I recall them saying that it was supposed to go up again for 2006.
So, as they say, timing is everything. The guy who had it before me saw it go up in value $6,000 in 6 years. Had he sold in 2-3 years instead of 6, he probably would've seen more like $15K+.
I just got lucky and bought at the bottom of a market. There was nothing cunning or genius about it. That just happened to be the time I was ready to buy my first home. And had I had to sell in 5-6 years, like around 1999-2000, I would've only seen about $7-8K of appreciation. But instead I happened to sell after 10 years, and saw $101K. However, that wasn't any genius on my part, either. It just happened to be when the place was ready to put on the market. Had I not had contractor problems and the place gotten finished sooner, I might've only gotten $155-160K for it. That's one reason why I'm not TOO pissed at the first contractor, who is the brother of one of my friends. His screwing around actually MADE me some profit!
Now if the guy who I sold it to decided to sell, he might see about $60K of profit. Not bad for just two years. However, whomever buys it at that price better plan on holding onto it for a long, long time!
