Is History Repeating Itself? A friend of mine recently asked me about historical home price appreciation in California. Since I’m a member of the California Association of Realtors and National Association of Realtors, this data was readily available to me. For all the money I pay these associations every year, that’s the least they can do! Anyway, looking back to 1968, the median home price in California was a whopping $23,210. Compare that to 2008 where it was $346,410. Here’s where it starts to get interesting. When I started looking at year over year appreciation during that time, California typically mirrored national trends. But the degree of appreciation (or depreciation) was magnified in California vs. the rest of the country. For example, in 1977 home appreciation for the entire country was 12.6 % but in California it was 28.1 %. In 1992 when the country’s appreciation rate slowed to 2.7 %, California was depreciating to the tune of -1.8 %. In 2002, the country’s appreciation rate was 7.0 %, while California experienced a 20.5 % rate. In 2008, the country’s appreciation (in this case depreciation) rate was -9.8 %, while California experienced a painful -38.2 %. But as we are starting to turn the corner, one has to wonder, will history repeat itself? Will California’s appreciation rate clearly outpace the rest of the country? I believe that Californians will keep the cycle going. Bear with me here on the thought process. When things don’t go well, we’re so educated that we try to be smarter than the market and bail out quickly causing precipitous drops. But when things go well, we’re an optimistic bunch and aren’t afraid to jump on the bandwagon. For better or for worse, I expect this trend to continue.
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