THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, June 27, 1996 TAG: 9606270416
SECTION: BUSINESS PAGE: D6 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: 37 lines
The appreciation of houses in Hampton Roads depends on how long you've owned your house, its location and the amount of your down payment.
``In the 60s, 70s and 80s, residential property was appreciating at a pretty good clip,'' said Jerry Banagan, real estate assessor for Virginia Beach. It appreciated between 10 to 12 percent in some of those years. ``That changed in the late 80s and early 90s,'' he said.
In the 90s, the appreciation rate is closer to about 2 to 3 percent, Banagan said.
Thomas Tye, who heads up a local real estate appraising and consulting company, offered some examples of how your money can work for you.
A house at 805 Suffolk Lane in Virginia Beach's Kings Grant neighborhood sold for $185,000 in March 1996. It had sold for $81,100 in October 1979. If you had owned that house for those 16 years, you would have seen a 5.12 percent annual increase using a compound rate of return, he said.
If you paid 10 percent, or $8,110, on a down payment, that compound rate of return comes out to 6.69 percent annual increase.
So the Harvard study doesn't apply to all houses equally.
If you're the owner of 5006 Newport Ave. in Norfolk, you come closer to beating the market over a 20-year period than most. That house sold for $54,900 in April 1979. Seventeen years later, the house sold for $108,000 in February 1996, a 4.06 percent annual increase.
If you bought the house and put 10 percent down, your investment would have compounded 14.28 percent annually. But that number is deceptive because you don't earn all of that if you're paying commission.
``What you need to keep in mind on these is that we had really big inflationary times in real estate in the 70s and some of the early 80s,'' said Tye. ``It's cooled off a lot. The reason these compound rates of return are so high is because they don't put a lot of money down.'' by CNB