This is the number one mistake I see investors make.
They look at the past and think it predicts the future.
So you see an area or region that’s booming.
That looks good. So you jump in, too. Buy a house.
Then it doesn’t go up in value.
I’ll give you an example.
“I lost out on $708,766!”
Let’s say 10 years ago, you were looking to buy a property in Auckland.
The median sale price was $830,000, and over the prior 10 years, Auckland house prices had been shooting up.
They’d gone up (on average) 7.5% a year over the prior decade.
So, you get on that bandwagon and say, “Let me invest too.”
You buy the median house. You think that if your house goes up by 7.5% each year, you’ll make $880,656 over the next decade.
But you didn’t.
Because house prices averaged just 1.9% over the next 10 years. So if your house followed the market, you made $171,890.
Still good. But $708,766 less than you thought.
