Cossayuna Lake Topics: LM Sales

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	Name:	Jaws -
	Subject:	LM Sales
	Date:	8/10/2006 9:00:49 PM

Historically, any time an investment (I.E real estate) has exceeded a normal expected rate of return you will get what is known as a Reversion to the Mean. Example, from what I've read here in the past most people expect Lake Martin real estate to appreciate at 10-12% a year. At 10% an investment will double in value in 7.2 years. At 12% it will double in about 6 years. When I hear about prices doubling in 3 years, that's 25% annually. This is clearly not sustainable. Here is some trivia, A person who invested in the stock market (S&P) in July of 1996 has earned 8.2% annually for the last ten years even though they have less money than they had in 2000. From 1996-1999 returns were above 20% a year and guess what? we've had a reversion to the mean. Same thing is very likely to happen in real estate. My guess is that best case prices appreciate slightly for the next 4-5 years. Worst case, they don't go up at all. For those who own at the lake be thankful you do. You can't put a pricetag on the fun. For those who want to buy, make sure it's for the right reasons like family time and fun. Those expecting the 20% returns of the last 4 years will likely be disappointed if that is their sole purpose in buying.