Why it is Time to Enter the Market and Secure Your Investment Dollar
Have you been watching the media talk about real estate recently? Be it print or video, the media is catching on that it is time for folks to purchase real estate. Heck, Larry King Live the other day had a few folks on to talk about the foreclosure mess and this is what Donald Trump has to say about our national housing market:
TRUMP: I do agree with Barbara. I think that this is a great opportunity to buy. And, unfortunately, not everybody is in that position because they have seen erosion. But if you’re out there and you have some cash, this is a fantastic time to buy. And even if you don’t have cash, this is the time to buy because you can make deals with banks.
Need more proof?
Check out the chart above. When housing starts drop below 1 million, they immediately rebound, and pretty rapidly too. The valleys also happen to coincide with national recessions, but that’s a topic for a different post and likely different blog!
The First American CoreLogic CoreMortgage Risk Monitor shows that through the end of 2007, national housing values were trending to a less favorable point for purchasers. Any point along the graph to the left that is below 1.00 is a point at which homes are more affordable than the 1995 baseline.
So housing affordability is still good, but got less affordable through the end of 2007?!
You Need More Examples and Articles?
Wall Street Journal May 6th, 2008- The Housing Crisis is Over
Home sales peaked in July 2005. [emphasis added]
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in. [emphasis added]
Wall Street Journal May 6th, 2008 – Is Housing Slump at the Bottom?
It’s important to note that real-estate prices in many areas are far from a historic bargain. And where there is a glut, prices — obviously — are likely to stay lower for longer. It is still a buyer’s market. If you are buying, drive a hard bargain.
Prices may still fall further. Yet if you are tempted to keep waiting for homes to get a lot cheaper, there are several reasons to think that might not happen.
First, there are too many other bargain hunters out there.
Second, the falling dollar has made these homes even cheaper to foreign buyers. There are plenty of people in Europe for whom Florida is now a bargain.
Third, interest rates are low right now. I hesitate to give my fellow Americans any extra incentive to borrow yet more money, but you can get a 30-year fixed-rate mortgage under 6%. If the economy recovers that won’t last. If you are shopping for a home, it is probably worth seeing if you can lock in one of these rates cheaply.
Finally, in an age of weak currencies and rising inflation, “real” or “hard” assets are in demand. That should include land, bricks and mortar. Sure, real estate isn’t as cheap as it has been at other times in the past. But are Florida homes any more expensive these days than steel, or copper, or gold? I’m not so sure.
You’re still reading? Great! Take advantage of this market, get into that home you’ve been meaning to buy. Get locked into a near historically low interest rate, and let the market “recover” around you buoying the equity in your property.
Begin your Ann Arbor Area property search, talk with a lender and let’s go find a home!