I have been asked this question a lot recently over and over. Most consumers tell me that they are unsure if now is a good time to buy real estate of not. I think there hasn’t been a better time in history to buy real estate, but what do I know?? With that in regard I have some factual information for both consumers and agents to support why I think there has never been a better time to buy, if you can find something affordable to you. Buying a house to simply be “house poor” is not a good financial decision.
First off, more wealthy people become wealthy buying assets in a downturn. Stocks, real estate you name it. It was Warren Buffet who said “Be fearful when others are greedy, be greedy when others are fearful” but this seems to be the opposite for the housing market. People where buying at highs a few years back, and so many people are underwater that new buyers are scared to come back into the market. The best time to buy is when prices are down, with any asset. Let’s look at what the wealthy in this country are doing:
People with a household income above $250,000 are the highest growing segment of the buyers in the country and purchases of 1 million and up are year to date about 11%.
In a recent Fannie Mae survey of consumers with this amount of income, 76% said they thought it was a great time to buy. 22% of these consumers said they were buying a new primary residence in the next 12 months and 11% said they were buying a second home in the next 12 months.
There is more cash on the sidelines than ever before in history and to see high price homes and wealthy people investing back into the market, that is a good sign.
Ever saw a good invention, or product and said “ I wish I invested in that” or “ I wish I thought of that”. Guess what ? If you could have gotten in on that investment early, or been one of the first investors you could have made a lot of money right? When it becomes household knowledge, or the herd mentality sets in, it is already too late, you have missed the opportunity to invest. That is where real estate is right now. Will we get double digit appreciation? I doubt it, but I think once things turn around, we will get back to the normal steady appreciation we were used to seeing. Investing now will pay dividends later. Think about it from this standpoint: In some parts of the country some houses are being bought for 50% of their replacement cost. If you could buy a car, computer, or anything of value for 50% of its value for only a limited time, wouldn’t you? If that is not is a indication of now being a good time to buy then I don’t know what is. The wall street Journal for the first time in a long time recently had an article about why buying a home now was a good idea.
Okay, enough with the investment talk for a minute. Most people do not buy a house mainly for the investment aspect of it any way. In fact looking at a home as an investment surprisingly is not even high on the list. In a recent survey of over several million consumers who recently bought 79% said they bought because they wanted a place to raise their kids and be safe. The top responses were very closely related to this. The reality is most consumers do not necessarily look at as an investment, just as their home. Well, if we all have to have a place to live, why not have your own and not live in someone elses?
Well wait what about interest rates? Isnt that a good reason to buy now? Sure is, but not just because there low, but because of the end cost to the consumer. That is what will well talk about in the next post, cost vs. price, it is a really good piece to share with consumers. Stay tuned it will be up soon.
This is just a snap shot and more articles are to follow. We will also look at the last ten years of real estate vs the stock market in the next few posts as well. Hope this information helps. Go out there and buy something!! check out my website at www.moorebrittingham.com or my blog at www.easternshorehomesolutions.blogspot.com