Depriciation Rates

Depriciation Rates

Depriciation Rates

Posted on: January 12, 2012 - 2:22 pm
by Admin

Recreational vehicles: Just like cares and boats, RVs lose a large percentage of their retail value the minute you leave the dealer’s parking lot and they continue to lose value as they age. Few people use RVs as much as they expecedt to when they plunked down the purchase price. Add the costs of gas and the space rental many people have to pay for the RVs when they are not in use and ownership doesn’t make much sense. Again, consider realistically how much you are going to use the vehicle, then calculate the difference between owernship and rental.

Luxury cars: In America’s fast-paced lifestyle, there is little chance that you can avoid a car purchase forever, but keep in mind that it is a depreciating asset. To get the most out of your purchase, focus on what you really need, not what suits your ego or what will keep you in the running with the Joneses. (If you were to look closely, you might find that the Joneses you are trying to keep up are debt-plagued.) A used car in good condition has already seen much of the initial depreciation priced out. Let the initial buyer take that expense. The corollary is someone who wants to have the benefit of gold’s stability, but buys jewelry instead. You can’t have it both ways.

Electronic Gadgets: They not only depreciate, they do it quickly. Owning the latest and, purportedly the greatest in computers or electronic gadgets may be popular, but it also is the least cost-effective option. The latest models always come with a premium price. Last year’s model is usually just as effective for the majority of people. And last year’s models will be heavily discounted as soon as the new model appears on the horizon, so you have a savings right up front. Make sure your purchase checks out with your wealth-building plans.

The prospect of any large purchase should trigger the question: “Do I really need this?” If the answer is “Yes.” proceed wisely. Opt for the product that fulfills your actual needs at the best possible value. Depreciating assets eventually affect your finances, so avoid them when possible and make devaluation one of the factors to evaluate as you make your purchasing decisions.

According to the Zillow Real Estate Market Reports released today, national home values have remained essentially flat, falling only 0.1 percent from October to November 2011 to $147,800, representing a 4.6 percent decline since November 2010.

Regionally, home values appreciated or remained flat from October to November in 60 percent of the 165 housing markets covered by Zillow, compared to 24 percent last year. Major metropolitan statistical areas (MSAs) that experienced flat or increasing home values include Los Angeles, Washington, Miami-Ft. Lauderdale, Fla., San Francisco and Detroit. On an annual basis, the median home value is down for nearly all (90 percent) of the 165 MSAs covered by Zillow, although the rate of annualized depreciation has slowed significantly in the majority of the markets.

“Overall, we are seeing encouraging signs in housing data such as sequential months of slowing depreciation rates, stabilizing markets and organic improvement in value trends, largely in the absence of government policy intervention,” said Zillow Chief Economist Dr. Stan Humphries said in his analysis on the Zillow Research page. “However, we’re not out of the woods yet. Supply and demand are still not in balance in many markets and we do expect higher foreclosure liquidation rates near-term, which will put additional downward pressure on home values.”

Dr. Humphries continued, “Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly followed by a prolonged period of flat home values. We’re still three to five years away from ‘normal’ housing market conditions.”

Author:Lauren Riefflin from Zillow.com