Buying Power

So after over a year of rising housing inventory and decreasing contracts we are starting to see a reverse in that trend.  From June to November, 2006 housing inventory in Montgomery County  hovered somewhat consistently around 5,000 available units (detached, townhomes and condos).  That dropped, as expected during the winter months, but so did the number of contracts. Now  inventory is holding somewhat steady at 3,300 (actually showing decreases over the past two weeks.)  Meanwhile pending sales are showing steady increases over the past 5 weeks after showing a consistent decline since June, 2006.

What does this mean?  Buyers see that the market conditions are favorable again. Interest rates are at historic lows, inventory is strong and prices have stabilized.  With job growth very strong in the region, limited land on which to build and consistent return on real estate investment over the past 25 years, it is a good time to make a well considered real estate investment.

Freddie Mac shows that housing has seen a 6.9% appreciation average over the past 25 years.  So let's take a $400,000 home.  In just 5 years this investment could see the following returns:

• $488,000 @ 4%
• $564.240 @ 6.9%
• $658,124 @ 10%

Now consider that you can make that investment with only 10% down.  In conservative terms a $40,000 investment could produce a 23% return!  And YOU GET TO LIVE IN IT!

Buying now at conservative growth rates is still the wisest investment!