Real Estate is still the best investment and right now the most affordable it has ever been.
Warren Buffett said it “Buying a home right now will be the best opportunity in your lifetime”. Many people listen when Mr. Buffett speaks and why not he didn’t get to be one of the wealthiest investors based on passing fads.
Let’s look at the data for the Bay area. The average annual appreciation rate was 6.2%. Our expectations for the next couple of years in the San Francisco Bay Area is 2-4%, which is probably better than the rate of return on most CD’s, other money market accounts and probably the stock market.
As an example, let’s look at the returns of the Stock Market vs San Francisco real estate over the past 12 years.
Why is real estate the most affordable right now? The interest rate and the price of homes. Here is an example of a home purchased in 2002 and one today for the same price:
· 2002 Price $600,000 Rate 6.99% P&I = $3,987.79
· 2012 Price $600,000 Rate 4.40% P&I = $3,004.57
· Monthly savings of $983.22 in 2012 vs 2002
To put the cost of borrowing money in another perspective:
As is illustrated the only cost that went down is the cost of money.
So buyers if you are still waiting because you think prices or interest rates will come down more, you are missing a real opportunity.Even if prices come down a bit, if interest rates go up you diminish your buying power.
And if you are a seller who is waiting for the market to come back to recover your losses, it could take years. You may get back that 20% loss, but at what cost. Put your money to work right now! Sure you may take a hit selling, yet you have the opportunity to buy at the bottom and ride the curve up!
Buying or selling - give Linda Urbick a call 925-415-30476 - let's discuss your real estate goals.
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