Posted by Tim Stobbs on February 6, 2008
So I was reading the news yesterday and came across this article where they are predicting another 26% rise in house prices in Saskatchewan this year. What got me freaked out about this is if they are even remotely correct, I should hit double point in my house value at some point this summer from where I bought it.
So looking back I realized I’ve been insanely lucky with real estate so far. How much so? Let me do a little review.
2004: Invest about $8000 as down payment on my first house.
2006: Sell first house and put down $40,000 in profit on next house as down payment.
2008: If market prediction is correct by summer house value minus mortgage should be around $240,000.
So granted we have been paying off our mortgage as this has gone on, but the vast majority of the equity in the house is from market increases. So in total from 2004 to 2006, is a 500% increase, while from 2006 to summer 2008 will be a 600% increase. Net therefore should be around 3000% over four years or an average of 750% per year.
So granted part of this is just a projection, but it does hit home a very important fact. I will be downsizing at some point in the future to extract part of that equity. When I’m not sure, it could be five, ten or even 15 years from now. I just personally dislike having that much money tied up in something that in the end basically provides shelter.