The 100 Year Buy and Hold

Sometimes it's hard to see the forest through the trees, and I get the sense that is what is happening now in the real estate market with all the bad press out there about home sales, real estate value, and the next wave of foreclosures to hit the street.

I was doing some consulting for a local church that needed help with its finances, specifically related to its real estate holdings.  Their building and separate single family home had been built over 100 years ago. The church had amazing records and I was looking at the original deed and purchase contract to the home from the early 1900's. It was only 2 pages long and the language read pretty funny.  I looked at the purchase price and then related that to what the property was worth today.  Though it had lost about 20 percent of its value over the past three years, over its lifetime the property value had grown at an average rate of between 8 and 9 percent per year. Looking at the same time period the stock market returned eerily similar numbers, approximately 9 percent growth (split evenly between price appreciation and dividends).

Very few of us will be around in 100 years to see that kind of appreciation in our properties, but if there is a silver lining in our cloudy economy it's that every recession (or depression) has been followed by a substantial pattern of growth that has spawned new wealth and a better economy.

Hang in there.