30 Years of Real Estate
The world we live in is changing at an exponential rate and real estate is certainly no exception. The real estate market has changed so dramatically in the past 30 years it’s almost unrecognizable.
It’s the summer of 1986, and something BIG was about to happen….my birth! But shortly after that day, the Reagan administration signed into effect new legislation that shook up the real estate industry as some of the most controversial legislation to ever be enacted. The tax reform act of 1986 altered how real estate and home ownership was viewed by closing loopholes and consolidating 15 different tax brackets to just 4 – among other major changes. As expected, the uproar was abundant – tax shelters for property owners that had been available for decades were closed.
But that’s not all that was going on in the real estate world. In this summer of 1986, mortgage interest rates peaked right around 11%. Now, the good news is these rates aren’t still around, and neither is a large majority of the legislation that had passed. To date there has been nearly 15,000 amendments to the 1986 tax reform legislation. Fifteen Thousand!!
What we’re getting at here, is just how much more conducive todays buying conditions are compared to that of just 30 years ago. To give you an example of what an 11% interest rate does to a purchase vs today’s rates (about 4%):
A 250k home with a 5% down payment at 4% interest would be a payment roughly $1,194/mo.
A 250k home with a 5% down payment at 11% interest would be a payment roughly $2,400/mo.
Your payment has more than doubled, ouch! It’s good to be a buyer today!
Technology in Real Estate
Let’s go back to 1986 again for a minute. You live in Chicago, but want to buy a home in Phoenix. Now what? No computer, no Internet, no smart phones. As you can image, you are up for a much bigger task than with today’s technology. Your best bet in 1986 is getting on a plane and fly to Phoenix, open up the local yellow pages, and lookup a local Real Estate Professional. Not only would you need the agent to locate homes, but you would rely heavily on them to learn about neighborhoods, schools, etc. And if you were lucky, they would take you to a beautifully designed modern home like this one:
Today’s home buyer walks a much different path. In seconds any information you could want to know is available in the palm of your hand. Buyers can Search the MLS online, research schools, neighborhoods and talks to locals in the community online all from the other side of the world. So now that a buyer has this incredible power at their fingertips, where does the Real Estate agent fit into the picture? (hint: keep reading)
Real Estate – Legal
Well, along with progression of technology something else has grown by leaps and bounds…Lawsuits! Did you know 80% of the worlds lawyers live right here in the US? We are more sue-happy today, right here in the US than anyplace ever in history. There are approximately 15 million civil lawsuits filed every single year in the US. What does this have to do with real estate? Everything. Buying and Selling real estate has many legal ramifications you should be aware of. Countless of these lawsuits are related to Real Estate transactions gone bad. Back in 1986, there was significantly less rules and complications than we face today.
Today’s standard Arizona Real Estate Purchase Agreement is 9 pages packed with an abundance of terms and obligations on both the buyers and sellers part. Any slight variations from the contractual obligations and the buyer/seller can find themselves in hot water quite quickly. Additionally many people fail to realize there are rules set forth in the Arizona Revised Statutes that hold buyers/sellers responsible for certain tasks and disclosures regardless of what is in their specific contract. This is where a good Realtor who understands not only the A.R.S. rules but also federal housing laws, is worth their weight in gold. Representing yourself with a large asset like property, is like representing yourself in court. Yes, you can technically do it, but you won’t like the outcome!
So what does this all mean? The role of a Realtor in has gone all the way from home hunter and information provider to junior law degree with a minor in marketing.
Of course other things have changed in Real Estate the last 30 years – shag carpet anyone? But one thing remains the same and always will – people need a place to live!!Search Homes for Sale
Leave a comment