In spring, 2004, my Brother-In-Law, a civil engineer/surveyor was hired by a firm in Naples, FL. He moved from Billings, MT to Naples, FL and purchased a condo shortly after arriving in April 2004. The building industry was booming! Real estate, nationally was selling like hot cakes! Naples, FL was no exception! There was no end in sight! Life was great! A lot of people making a lot of money! Then, in April of 2005, my Brother-In-Law unexpectedly passed away. I flew down to help my wife for two weeks emptying the condo and made arrangements for his daughters, ages 9 and 11 at the time to be flown back to live with their mother in Montana. As I helped my wife with the estate, I started tracking home sales in the Naples and surrounding area starting in April of 2005. We had a business and were living on the other side of the country at the time on the Oregon Coast, doing everything long distance. From April 2005 to October 2005, I watched the real estate inventory in the Naples and surrounding area almost double! I told my wife we needed to get the estate settled ASAP. Then, from October 2005 to April 2006, inventory almost doubled again! I mentioned to my wife, “This is going to be a big one!” It became a two year nightmare and we lost a substantial amount of our own money trying to do what was right for his daughters. Having been in the building trades for many years, I’d seen a few real estate booms and busts, which usually run on 7-10 year cycles. Never one as big as that one.

I recently read an article in Christianity Today. It made me think about the world of real estate and how similar it is to money. One paragraph starts like this: “Money is, in a way, the letter in an algebra equation. It’s the substitute until the “real value” of something has been met by something else. And that “real value” can change dramatically based on what a culture believes.” The same can be said for the “perceived value” of real estate. Here in Northern Colorado, we have seen substantial, double digit increases in “perceived property values” over the last three years. Low inventory and high demand have created this frenzy. It is also happening once again in many other parts of the country. Here is a link to an interactive article from the Economist which shows national trends in areas throughout the country: http://www.economist.com/blogs/graphicdetail/2016/08/daily-chart-20. The real estate market started regaining traction around late 2010. Most of the country recovered a good portion of the lost equity from the last melt down, (2005-2008) around 2012, when market prices hit pre melt down levels. In 2013, the market kicked into overdrive and has been on this steep climb ever since. Should we keep a close eye on this market. I say yes. If one tries to use reason and logic in real estate, it will only confuse you. Real estate in only 10% black and white. The remainder, 90% is muddled gray area. How are appraisers are able to justify these huge gains in “perceived property values”, how are lenders are able to loan on these steeply rising properties and how is all this being held together? What and where are the checks and balances? Yes, predatory lending and Wall Street played a big part in dropping the world to its’ knees from early 2000’s to 2008, when they could no longer hold the lie together. Have things changed for the better? I’d like to hear some opinions from appraisers and lenders. What type of challenges are they facing in this current market? First time home buyers are seeing big challenges in a very competitive market, as those buyers with larger sums of money for down payments in desirable areas usually have the upper hand. The variety of loan packages being created in this very competitive market are allowing minimal cash down once again for those first time home buyer to be able to afford a home. With little skin in the game, what is to keep these home buyers with little invested from not walking away when the market has another downturn. Or will we never see another downturn in real estate because home prices never go down, right?