In a recent conversation with a woman who became a new client, we were discussing the various economic factors contributing to the current real estate market. I was impressed with her understanding of the situation, but most moved by her concluding remarks. “I understand that I’m probably going to lose money on the sale of my property, but I more than expect to make that up on the property I buy.” In so many ways that summarizes precisely what I find is going on out there.
Consumer confidence, for a variety of reasons, is low. That translates into a significant hesitancy on the part of prospective sellers to get into the market. I understand that. The news is filled with dismal housing reports, particularly with respect to bank foreclosure activity. But as my client made me realize, that is only half of the story.
Ask any savvy investor or financial advisor when the best time to buy is and they’ll tell you “when the market’s down” or “when the price is low”. Isn’t that precisely what we’re facing now in the housing market? Would you rather hold on to an investment which may never gain the value you expected years ago? Or does it make more sense, if you are thinking about selling, to do so now to take advantage of the most attractive purchase market in modern time?
I’ve just read a J. P. Morgan Asset Management report titled “Housing: A Time to Buy”, which lays out the case in easy to understand terms why now may be the best time to buy property. The report was authored by JPM’s chief market strategist and a market analyst on their US Market Strategy team. The authors point out that years of falling mortgage interest rates and falling home prices have created an incredible home buying opportunity, which they opine is attractive even when compared to the cost of renting property. “Five years ago, at the peak of the home-buying euphoria, it was emphatically a time to rent. Today, when home ownership is depreciated more than ever before, the numbers tell us it is a time to buy.” If you haven’t read the report, I’d encourage you to do so as it is well-written and illuminating.
I sense a great deal of pent-up demand on the sidelines from folks who’d love to move into a new home, but are frightened by what they read and see out there. Make no mistake that there is buying/selling activity out there (thankfully), but this is clearly a different market than many of us anticipated five years ago. Every circumstance is different, so please consult with your financial advisor before making any decisions. But once you do, there are some important guidelines to success in this market which I discuss with each of my clients. This is a new paradigm, but one full of opportunity. www.MaryCraneProperties.com.
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