Q: Is there solid ground for the expectation for recovery in the housing market?
- Sylvia Cummings, Palm Beach, Florida
A: Rental prices – of all things – will fuel the recovery. With current economic trends being what they are, buying up properties to rent out is a very profitable option that real estate investors are beginning to recognize and act on. House prices are cheap right now. At an average 30-plus percentage below their peak, buying a home is a bargain in just about any area of the country. In fact, in many cities, it’s even more affordable to buy – taxes and all included – than to rent. Better yet, borrowing costs have been recorded down around 20 percent year on year, and mortgage rates hit an all-time low in February.There are so many added incentives for people to take up their piece of the American Dream – complete with white picket fence should they so choose – these days that it’s practically a tragic shame not to act on the chance. That’s from a buyer’s perspective. But as the previous points show, there’s an even stronger case to be made from an investor’s standpoint. Clearly, the smart money is moving into the housing sector. But there is still time to get in and take advantage of the bargains available. Negative sentiment still dominates the industry. News outlets – from newspapers to radio programs to TV shows – are still painting real estate as being entirely hopeless. Skeptics say there is an oversupply that more foreclosures are just months away from flooding the market…that housing can’t rise until the supply overhang is removed. We believe the facts show just the opposite. What they show now is a fantastic time to buy a home. Prices are cheap. And with record-low mortgage rates, housing is now more affordable than ever. With inventory statewide at just 5.2 months, even prices on foreclosed homes are going up.
In October, the average bankowned home in Florida sold for $95,100, up from $84,350 from the same time in 2011. The days of buying a foreclosure for pennies on the dollar are over; as soon as one is listed, it’s gone, so if there are foreclosures ready for the market, I say, bring them on.