April 8, 2011 Newsletter
According to an article in the latest FORTUNE magazine, real estate is on the return. The article followed the surveys done by Mike Castleman who owns Metrostudy, a company which tracks real time data as to inventory of new homes. According to Castleman’s figures, there is one fourth the number of new homes on the market compared to 4 years ago. The two reasons a dramatic recovery should be coming is the drop in prices and the lack of new construction. (Not to mention we still have record low interest rates.)
The article goes on to analyze a new study by Deutsche Bank as to home affordability which determines in many markets it is more cost effective to own rather than rent. Because of price reductions and low interest rates, many markets show that owning a house with the requisite mortgage, taxes and insurance is less than the comparable rent for the same home.
The looming factor of foreclosures is also dealt with. It’s estimated that on average we are looking at one million foreclosures per year for the next 2 years. Even so, the study shows the majority of those foreclosures will be bought by investors and turned into rental properties. After all, those displaced by foreclosure have to live somewhere. All in all the conclusion drawn is that in terms of investment, now is the time to buy. The article does not go so far as to say we have hit bottom, but the statistics indicate that owning versus renting is becoming more attractive, and when that happens, buyers start buying. When more buyers enter the market, prices will stabilize and increase. Share this with anyone who has expressed thoughts that real estate is dead. The issue if you wish to read it in full is for April 11, 2011.
We want to be your title company and law firm. Contact me at 410 884 1160 x 3007 or email at email@example.com.