The State of the Market a 20 year perspective

Update for 2007

The market has been somewhat slower and prices are softer. If you are going to sell you home in the next few years, however, now may still be a good time. So far, interest rates have not climbed much - if they do, and it looks probable they will, prices could well drop considerably more in coming years.
It has been a long bull market - more than the typical seven year cycle - and the correction may well continue a few years.
Andrew Peck

Update for 2006

I removed my 2005 - 2006 update written in November 2005 from this page, as it was interpreted as being more negative than I had intended. While not as sanguine as my forecasts below from earlier years, it was not meant to discourage anyone from purchasing real estate.
On the contrary, with the falling value of the dollar, ownership of things "real," such as real estate, such as precious metals, is a protection of one's assets. Cash is almost a certain loser to inflation and the devaluations of the dollar. If you can't trust the government to be fiscally responsible, you can assume that fiat money, not backed by gold or silver but only the faith in the government, will lose value over time.

Like real estate in this area, gold and other precious metals have in the recent past been "underpriced." Today, with gold over $500. an ounce - like real estate, double what it was a few years ago, is it overpriced? I don't think so. Most people think of the record high price of gold as $850. in 1980, but in real, inflation adjusted terms, gold then hit $2,500. an ounce in today's dollars.

So what is one to think, what is one to do, in times of uncertainty. I believe one should always have a significant fraction of ones assets in real estate. If prices seems high now, they may well seem cheap in the future. As an example, some decades ago, my sister purchased a home in California for $70,000. Before long it was worth $250,000. - it looked like a bubble - and she sold it. Today it's worth over a million.

Having said that, I will admit to having sold a few of my real estate holdings in the past year. But - and this is the key - that was because 90% of my assets were in real estate. If I had no real estate holdings, I would have been looking to buy.

Update for 2005

Prices have leveled off, after rising for a few years. Activity in January seems slower than the past few January's. Usually, I am loath to make predictions (the last time was in 1998, below, that the market would be rising), however, at this point, I believe that profligate government spending and its burgeoning debt inevitably will harm the economy and the real estate market in the coming 12 to 24 months. The already plummeting value of the dollar inevitably will lead to inflation. Inflation will bring higher interest rates, and high interest rates will make homes more costly for anyone needing a mortgage. I expect a slowdown.

Andrew Peck
Woodstock, New York
February 2005

Update for 2003 

Below is a summary historical record beginning when we first launched this website in 1996. At that time, the listings at the bottom of this page I put on a separate page "Underpriced Properties." I usually avoid forecasting the future, however, it seemed pretty clear that these were good values. Today every one is worth at least double what they sold for. The biennial updates have proven correct, as prices have continually improved since then. At this point, I will only say the future of the real estate prices here will depend significantly on the state of the economy ahead. Andrew Peck

Andrew Peck
May 28, 2003

Update for Summer 2000

The article and forecast below, written 2 years ago, proved correct, and prices are now up 50 to 70% from the nadir in 1996-1997. If you're a buyer, though, don't dismay. I strongly believe that prices, however improved, are still quite reasonable. Is there a rational basis for this opinion? I think so; there are some benchmarks for comparison; with trepidation, I refer to them as indicia of "underlying" or "real" value: 1. Most prices are still below "replacement cost" -- the cost for a similar home if you purchased land and built a new home. 2. In inflation adjusted terms, prices are well below the peaks of 1988 to 1990. 3. Homes are bargains compared with other popular areas of the country. The cost of a quarter acre vacant lot in some parts of California will buy you a fine home on several acres in this area. Therefore, my prediction is, barring war, depression, nuclear power plant accident, or a precipitous decline in population, that in the foreseeable future - 5 to 20 years hence - today's prices will look like bargains. (Just as the purchase of my Woodstock home in 1966 for $3,000. does today). God willing, I'll be here, on this page, in 2005 and in 2020, to claim bragging rights.

Andrew Peck
June 13, 2000

1998 Update

The 7 year "Bear Market" in Ulster County real estate has finally ended, with increasing sales and improving prices. Now that all the properties below are sold or about to be sold, this page will be left as a historical record of past opportunities. Of course, a number of great deals come along each year, but when they are scarce, we keep them for our clients who are actively looking.

The recent bear market began shortly after the frenzied market at the end of the 1980's. The fall in prices was precipitous, with prices of real estate falling 25 to 45% to the nadir in 1996-1997. In "real dollar" (inflation adjusted) terms, the decline was even more severe, perhaps 35 to more than 55% (depending on the type of property).

While it is hard to know accurately just what's happening today in the market until later, when time gives perspective and statistics, my estimate is that we (CENTURY 21 Teran Realty) will do as much business in the first 5 months of 1998 as we did in all of 1997, that prices have appreciated somewhere between 5 and 15% in the last few months, and that the inventory of unsold homes has stopped increasing or is declining.

Although I make no claim to be able to be able to forecast the future, I do believe that prices are still historically low, and that even with the modest increase in prices, buyers have excellent opportunities. Time will tell.

Andrew Peck
April 6th 1998

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