If you intend to buy real estate in this lifetime, and don’t do it soon, there’s a good chance you might be kicking yourself in the coming years. Seriously. There are at least three factors in the current property market pointing towards the sweet uptick after a long, bloody fall down from the dizzying heights of 2006. In case you missed it on a recent episode of The Creating Wealth Show, here is what host Jason Hartman thinks you should be paying attention to.
1. Low Mortgage Rates
Actually, saying that mortgage rates are low is like saying Superman can take a punch. The mortgage rates you’re going to find on the open market are mind-bogglingly low. As low as they have been in 50 years. That’s half a century! The week ending June 2 saw rates settle at 4.55%. We’re not going to put our hand on a Bible and swear they can’t go lower but, as a real estate investor, you’ve got to pull the trigger on a deal at some point and the Standard & Poor’s Case-Shiller index shows house prices have slunk back to 2002 prices in some areas – 1999 prices in others. This is what they call blood in the streets.
2. Buyer’s Market
Whether a family looking for their version of the American Dream or an investor itching to enter the fray again, the name of the the game is affordability. Moody Analytics reports the ratio of home prices to income is almost 21% lower than the 15-year average that ended in 2010, and 12.5% lower than the same time span between 1989 and 2004. Once again, we’re talking about incredibly favorable real estate market conditions – if you’re a buyer.
3. Distress is Slowing
Of course one of the factors driving all these ultra low prices is the flood of distressed properties brought about by the foreclosure crisis, which has been an amazing sight to behold for a number of years now, seeming like it would never end. At Empowered Investor Network, we’re not silly enough to say that it’s all going to be peaches and cream going forward, but our opinion coincides with that of Moody’s, who believe that the flood of distressed properties will begin slowing in 2013 or thereabouts, allowing housing prices to begin to edge upward after that.
A good time to think about buying? Yes.
The Creating Wealth Team
Flickr / Anderson Mancini
