I have recently spoken real estate with many people: my brother in Illinois, friends in Alabama, New York, Massachusetts, and on. Since I am a Realtor® they ask my professional opinion on buying and selling their homes. The math in the market is simple. If you have cash for a down payment, a good credit score and are ready to move there are plenty of homes to chose from in just about every market of the US.
Homes are more affordable today than they have been in the 35 years since we have had an affordability index. Interest rates, while above the nadir, are far below the average for the past 30 years. The national news tends to focus only on the negatives. For instance all of the stories on the low level of housing starts sounds terrible, however if you own a home and want to sell this is great news because less housing starts mean less competition for your home when you sell.
On the other hand, if you are looking at buying real estate, every time you hear “bad news” on TV about decreasing prices what you are actually hearing is that you will get more house for your dollar when you buy.
Also remember every local market is different. I mainly work in the College Park and Winter Park market of the Orlando Metro area and while there is still plenty of inventory to choose from, the number of homes on the market has shrunk 49% from our 2008 highs. We’re at about 10,085 as of today.
There has also been an ongoing debate of whether it is better to own than rent. In the short term it may make sense to rent. But consider this statement by the prominent investor Warren Buffet: “Home ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates. All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks. For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come.”
In this same note he stated that a housing recovery should begin in about a year. The quote above was from Buffet’s letter to his shareholders and can be seen in entirety here
So are we in the next boom? Maybe or maybe not, but we are much closer to the bottom than we have been in a long time. And you could see some erosion in pricing in the short term due to over supply however there is no where near as far to fall especially in Central Florida where are pricing is flirting with ten year lows in many areas. And that is not taking into consideration inflation!
Do you have your sites set on a new home?
Credit: Greg Vazzana Florida Real Estate Newsletter