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November 2010 . Market Update The housing market continues its gradual recovery
without the aid of the tax credit. Sales are slower but growing. Although it
will likely be uneven at times, slow growth is believed to be the trend
moving forward. Interest rates hit a new historic low again, a major factor
in helping keep mortgage payments incredibly affordable. Extended periods of record low interest
rates and further plans from the Federal Reserve Board to expedite recovery
have some concerned about future inflation. One such investment guru, John
Paulson, touted the benefits of owning real estate as a hedge against
inflation on Forbes.com. “Your debt and interest payments get locked in at
record lows, while the price of your home will rise … If you don’t own a home
buy one … if you own one home, buy another one, and if you own two
homes, buy a third and lend your relatives the money to buy a home.” This march back up continues to provide excellent
opportunities: an ample selection of homes, affordable prices, and
historically low interest rates. Experts anticipate both the economy and the
housing market will continue their paths on the way to a complete recovery. Home Sales Home sales continued to rebound in September, increasing 10%
compared to the previous month. This builds on August’s gain of 7.6%
that followed a large drop caused by the expiration of the federal tax credit
in July. Sales are expected to gradually grow as the market moves toward
recovery without government stimulus. The recent foreclosure moratorium has
opened up opportunities for short sales. Although it could make the near-term
“choppy at times,” industry experts expect the overall trend to continue
growing slowly. Home Price After four months of prices remaining on par with year-ago
levels, September showed a slight decline. Last September distressed
properties were 29% of all home sales; this September that number rose to
35%. The larger proportion of distressed sales, which are typically discounted,
helps to explain the decline. While these discounted sales provide
opportunities for buyers, sellers look forward to the general trending upward
of home price.
Inventory There are fewer homes on the market again in September,
representing 10.7 months of inventory. While still at a relatively high
level, months of inventory shrank by nearly a month in September from
August’s 11.6 and nearly two months since the 12.5-month supply in July. This
continues to represent an excellent opportunity for buyers and investors who
have not yet taken advantage of the abundant opportunities of the market
including record low rates, an ample but shrinking selection of homes, and
highly affordable prices. Affordability Housing remains at near-record affordability levels, and
prospective home buyers stand to benefit from the lowest mortgage rates in
decades, as well as advantageous home prices. Housing is approximately 60%
more affordable now than during the height of the market. Source: National
Association of Realtors
Interest Rates Mortgage rates once again set new record lows in early
October to 4.19% and
remained below 4.3% throughout the month. These historically low rates
contributed to real savings for buyers. Furthermore, the longer the buyer
owns the home, the greater the savings they will realize. As economic
activity gains momentum, rates will rise to keep inflation at an acceptable
level. Rates as of November 4 .
This Month's Video Topics
For Home Owners, Buyers & Sellers Prime Time to Buy
7 Reasons Why Now Is a Great Time to
Buy a Home
Recent history has reframed some of what had long been taken
for granted about buying a home. Namely, we’ve learned that even though
buying a home remains one of the best and safest investments available, a
home should not function as an ATM or a short-term speculation strategy. So,
where does that leave us? A lot smarter, able to recognize an opportunity
when we see one, and aware of the facts that point to now as the prime time to buy a
home. 1.
Home affordability is at an all-time high. The median mortgage
payment on the median-priced home, as a percentage of the median household
income, is lower than it’s been in a generation. 2.
Mortgage rates are at rock bottom. It’s hard to imagine interest
rates going much lower, and when they start to inch back upward, monthly
payments and total loan costs will spike upward. 3.
Home prices are back on the rise. After declining for
30 months, home prices are trending back upward. The time to get in the
market is now. 4.
Sellers are motivated. This means that
buyers have the upper hand. Sellers are fiercely competing among an
excess of housing inventory, which often means buyers have untold choices and
negotiating power. 5.
Financing is readily available. Banks are back in the
game and ready to lend to well-qualified buyers. 6.
Owning vs. renting is increasingly
favorable. Since 2009, the average principal and interest payment has
fallen below the average rental rates, and the gap is now wider than it’s
been in the past 22 years. 7.
Homeownership is still at the core of the
American Dream. Owning a home is critical to financial stability and
wealth building. It’s a forced savings account, a place to live, and a
fabulous tax deduction. For more
detail, check out Keller Williams Realty’s 7 Reasons
Why Now Is a Great Time to Buy a Home! and The Wall Street Journal’s 10
Reasons to Buy a Home. Sources: The Wall Street Journal, Inman News, KW
Research
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NARESH
K. CHHETRY Real Estate Agent Website: http://naresh.yourkwagent.com/home |
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to you by KW Research. For additional graphs and details, please see the This
Month in Real Estate PowerPoint Report.
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intended to supplement opinions on real estate expressed by local and
national media, local real estate agents and other expert sources. You
should not treat any opinion expressed on This Month in Real Estate as a
specific inducement to make a particular investment or follow a particular
strategy, but only as an expression of opinion. Keller Williams Realty,
Inc., does not guarantee and is not responsible for the accuracy or
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of any kind. All information presented herein is intended and should be
used for educational purposes only. Nothing herein should be construed
as investment advice. You should always conduct your own research and
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Williams Realty, Inc., will not be liable for any loss or damage caused by
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