I am beginning to see that others are beginning to believe what I have been saying since the middle of last year, and that is the Real Estate market is showing signs of not just a recovery but a very healthy rebound.
In an April 13, 2011 article written by Frank Nothaft, Chief Economist for Freddie Mac; he expresses a positive outlook for spring home sales due to decline in unemployment, a slowing of new home sales and continued affordable interest rates. He cites the labor market report and “high homebuyer affordability” as the significant increase in existing home sales. His conclusion is that home sales will increase (yes – increase) by 5% over last year’s sales. The projection for 2012 is an increase of 12.2%.
The National Association of Realtors claims; “homebuyer affordability is at its highest level in 40 years due to low mortgage rates and low home prices”. In addition, Shawn Tully, senior editor at large for Fortune Magazine writes; “After four years of plunging home prices, the most attractive asset class in America is housing”. He cites that the lack of new construction will be one of the major contributing factors to an improvement in home pricing. Another contributing factor that he cites is the cost of owning verses renting. Many renters are figuring out that they can own the home across the street for equal or less than they are currently paying rent for. This is a no brainer for renters who have the ability to purchase. As the demand increases then the supply will begin to decrease and we all know what that means – home prices will rise!
There are still areas in which distressed homes (bank owned and short sales) are keeping house prices low and new construction in those locations remain stagnant. There is no doubt that these troubled assets will continue to impact the real estate recovery. As the inventory in the non-distressed markets decreases, it will cause buyers and investors to look to the distressed markets for the “deal”. I believe we are already seeing this happen and it is where the bulk of the activity will be for the 4th quarter of 2011 and all of 2012.
If you are in a position to buy real estate then I think this is your window of opportunity as home prices will start to go up and so will interest rates. Whether it is your first home purchase, moving up to a larger home, buying investment property (that in today’s market is turning a positive cash flow), downsizing, or even buying land for future construction – this is your historic moment! The real estate market is poised for a rebound and if you want to make a move or an investment then contact me right away! I can be reached via e-mail; mike.southwick@c21selectgroup.com
Placerville Real Estate Guy - Mike Southwick 