Shimmers of Light Shine on Housing Market
With all the doom and gloom in today’s media, I wanted to take a moment to address the changes we’re seeing in the current real estate market. I honestly believe things aren’t as bad as some people are making it seem. Here are some examples of the positive outlook of the housing market:
Housing Affordability at All-Time Best (Barron’s)
Housing affordability (measured as the percentage of income needed to afford the monthly cost of a median-priced home) reached an all-time best in the first quarter of 2009! Areas with the highest levels of foreclosures showed the largest year-over-year increase in sales in the last quarter – 46% in Arizona, 80% in California, 25% in Florida, and 111% in Nevada.
Homes: Most Affordable in 2 Decades (CNNMoney)
The NAHB is also addressing the increasing affordability of housing. According to the Housing Opportunity Index, 72.5% of all houses sold in the first three months of 2009 were affordable to families earning the national median income of $64,000 (up from 62.4% during the previous quarter). Affordability scores are going up all over the nation.
U.S. MBA Mortgage Applications Index Rose 2.3 Percent Last Week (Bloomberg)
Lower interest rates are contributing to the rise in mortgage applications in the US. Rates for new mortgage rates and refinancing are still very near the all-time record low we saw back in March; this incentive, in addition to more affordable housing, is going to help the slumping real estate market because people are seeing how attractive it is to purchase a home right now.
Signs Of Housing Bottom Building (Investopedia)
Home building companies across the nation are seeing vast improvements in their stock prices (D.R. Horton is up 150% from their 52 week low). Several real estate based Exchange-Traded Funds have appreciated between 25-30% since March. According to this article, “Alan Greenspan, former Federal Reserve chief, recently suggested that the U.S. is ‘at the edge of a major liquidation; in the stock of unsold properties. If that’s so, we should expect a recovery to be close at hand.”
The Housing Market Hits the Bottom (Huliq)
Almost half of Realtors surveyed by HomeGain.com expect home prices to stop falling and start rising in the next six months. Since the number of foreclosures entering the market have slowed, new home construction is down, and more buyers are now able to buy homes, the inventory of homes on the market is quickly dropping and therefore encouraging buying.
If you are serious about buying investment property, I highly encourage you to do it NOW. You must buy while prices are still low and fear is rampant. Once things start looking too rosy, bargains will be tougher to find. Don’t say I didn’t warn you!
Until next time, happy (and profitable) investing!
Real Estate Investor
Founder of MyHouseDeals.com