With interest rates at historic lows, house prices favorable, and the housing supply through the roof, this is the trifecta for home buyers. The last couple of years the housing market has in reality taken a dive. Buyers have run for the hills to wait out this mortgage mess. The main questions is has it hit bottom yet. Most key economists and politicians have realized that the market has hit rock bottom. Builders of new homes have slowed their activity thereby allowing their inventory to reduce. Congress and the President are actively talking about a stimulus program. (Of course, it doesn't hurt to have elections later this year.) Although consumer sentiment is currently negative, this will change. As soon as potential homebuyers understand that the overbuilding frenzy of the past decade has stopped and the recent, short-term sudden decline in home values has ceased, they will realize that this IS the best time to buy a new or existing home!
Some future buyers might still be skittish. But, investors have been calling my office in the last couple of weeks asking about what homes could rent for, what do they need to put down, and can a home rent for more than the mortgage is? The average 4 bedroom home in Riverside is renting for $1795 a month. Most lenders are asking for 5-10% down on a home. There are a lot of homes that are in decent areas in decent condition in between $200,000-$250,000. I was doing some quick stats to find out if an investor bought a home for $250,000 and put 10% down ($25K), at an interest rate of 6% for a 30 year fixed loan their payment would be $1,348. If the average rent is $1795 then that would be a $447 a month in profit. I was pretty conservative on these numbers. The potential for a long term investment is there. The days of buying and flipping a home are long gone but the potential for a long term investment is still going strong.
I have a question to pose. Where do you think all of these individuals are going who are losing their homes? They have not lost their jobs. A very small percentage of them are experiencing some kind of dire situation. All of these people need a place to live. They are moving into rentals. The rental market is the strongest it has ever been. There are many people who can't afford a $2500 mortgage but can comfortably afford an $1800 rent.
Sincerely Kevin Williamson local REALTOR http://www.williamsonteam.net/
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