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Should I Buy Kauai Real Estate Now?

Any investment consideration, whether it be real estate, gold, or fine art, follows a predictable cycle with nine stages. Let’s start with optimism, the period in which many people are excited about buying a home. When the market is strong, people’s purchases quickly increase in value, which leads to euphoria, which can lead to rash decision making. From euphoria starts a downward cycle. As prices start to fall, buyers go into denial, with statements such as “I’ll be in the house a few years, so this won’t be a challenge.” After denial comes fear, as prices continue to fall, followed by panic, despondency, and depression. After depression comes hope and then optimism (back to stage one). The point of maximum risk for any investment is during the euphoria stage. The point of maximum opportunity is at the lowest point, between despondency and depression. That’s exactly where we are in many real estate markets today. Clients who are motivated and qualified to buy will be able to look at the market cycle chart and understand why now is the best time to invest in real estate.

Is homeownership really a good way to build wealth? According to NAR, home values appreciate 4.5 percent annually on average. That’s a great return; however, very few buyers pay in cash. Most try to put as little cash down as possible. The amount of cash buyers put into their home determines their return on equity, which is the total return on the cash they initially invested. So the return on equity can be astronomical. It’s easy to see that real estate isn’t just a good investment; it’s a great investment.

Real Estate Market Chart

Source: Steve Harney specializes in negotiation and leadership training. He has been in the industry for more than 20 years, first in sales and then as broker-owner of a 500-associate real estate company. Visit him at www.KeepingCurrentMatters.com.