Is now the time to buy? Without over simplifying the current housing market, I'm going to clearly state my position on why now is quite possibly the greatest time to buy real estate.
Buy Low, Sell High
Whether you believe that home sales numbers are trending slightly up, or just bouncing off the bottom, this often overlooked piece of investing advice applies. Let's face it, real estate home prices are low. Some places are more depressed than others (filled with an abundance of foreclosures and short sales), and some areas/towns/neighborhoods are faring far better... but across the board prices are down. If you subscribe to the philosophy that buying low is sound investing advice, now is the time to buy.
Prices AND Rates Are Low
Historically, housing prices go up when rates are down and vice versa. The two, rates and prices, have an inverse relationship. The reason for this is that home affordability is simply, "How much will this house cost me per month?" If high interest rates make the monthly mortgage payment go up dramatically, then you'll see the prices on houses come down to more affordable levels to offset it. Right now, we have low rates and low prices. This is a very strange and rare opportunity to capitalize. You can literally own a house for less than rent.
Rents Are Increasing
Because many are uncertain about the housing market/their jobs/their financial security/etc., a vast number of would-be home buyers are sticking to renting. So investors are furiously snatching up more rental properties to accommodate the increased demand for rental units. Not just multi-family buildings, duplexes, and such, but single family homes. We've been inundated with novice and experienced investors alike, contracting our services for brokerage and subsequently for the rental and management of these properties. Why? Rents are up and single family houses are cheap.
If you buy a $100,000 home, with $3,500 down, and a 5% interest rate, your total mortgage/taxes/insurance payment every month is around $780 (based on some average assumptions for taxes/insurance/mortgage terms.)
That same house, if you wanted to rent it right now? $1,300+ per month for rent (no utilities included.) You'll also be ponying up first, last, and security or $3,900 just to move in.
Real Estate Is Finite
The earth we live on isn't getting any bigger. As the population grows, demand for housing increases. Simple economics supports that increasing demand, and a fixed supply, will inevitably yield higher prices. So unless somebody colonizes the moon or launches elaborate space stations that will house a substantial portion of the population, real estate prices will continue the trend of increasing over time. This bodes well for those that own real estate currently, or are planning to acquire real estate in the near future.
Be A Part Of The Recovery
The faster people start re-investing in real estate, in neighborhoods and towns across the United States, the faster our subdued economy will recover. The dragging housing market is widely recognized as the largest drain on our current markets. But, you can help and be a part of the comeback... tell your friends, tell your family, tell a stranger, "Now IS the time to buy" then have them give me a call.
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