Market report – Why Wait?

It seems that every time we’re talking about real estate today, the conversation immediately goes to the financial aspects of buying a home. How’s the market? Where are interest rates headed? Should I wait to try and get a “better buy”? Where are prices headed? Should I wait until I can get a “steal”?

The interesting thing about all these natural questions is that survey after survey keep telling us that price is not the primary reason families buy a home. However, money is typically considered in terms of affordability and in light of not paying rent to a landlord.

The Survey Says:

According to the 2011 National Housing Pulse Survey, most Americans still believe that owning a home is a solid financial decision, and a majority of renters aspire to home ownership as a long-term goal. Seven in ten Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home.

The top five reasons given in the “National Housing Survey” for buying a home are, in order:

• It means having a good place to raise children and provide them with a good education

• You have a physical structure where you and your family feel safe

• It allows you to have more space for your family

• It gives you control over what you do with your living space (renovations and updates)

• Paying rent is not perceived as a good investment—at the end of the rental period all you have is a stack of cancelled checks.

The top four reasons given in the “Myers Research and Strategic Services Survey” for buying a home are, in order:

• Home ownership provides a stable and safe environment for children and other family members

• Home ownership means the money you spend on housing goes toward building equity, rather than to a landlord

• Home ownership creates the opportunity to live in a neighborhood that you enjoy

• Home ownership allows you the right to decorate, modify and renovate your home as you see fit

The Survey’s Bottom Line?

Finances and price dominate the conversation when we talk about buying a home. However, when it comes down to it, we actually buy for the same reasons our parents and grandparents did—we want a better lifestyle for ourselves and our families. And now, with affordability in Southern California at its best level in decades, it makes all the sense to buy for all the right reasons.

What About the Stock Market?

Everyone is talking about the stock market. The good thing about real estate is you can “leverage” or use the bank’s money to buy it, and have a tangible asset at the end of your payment schedule. Liz Ann Sonders, senior vice president, chief investment strategist, Charles Schwab & Co., Inc. wrapped up recent volatility in the stock market this way:

“At this point, we believe that the recent selling in the stock market may overestimate the possibility of a recession, and we urge investors not to get caught up in the fear.”

Key points From Liz Ann Sonders:

• We continue to believe we’ll avoid a recession due to continued positive leading economic indicators, an improving jobs picture, solid corporate balance sheets and a still-steep yield curve.

• Demand for loans has increased and stock buybacks are at their highest level since October 2008.

• Selling pressure has been heavy as European banking fears combined with soft economic data. Risks have grown, but not all is in the negative column and markets may be overreacting.

• Investing can be nerve-wracking in environments such as this, but we believe sticking with a well-devised long-term plan continues to be the best course of action.

The Oracle of Omaha Weighs In Forbes recently reported Warren Buffett stated the housing market remains the key to the economic recovery, and the key to getting the U.S.’s unemployment rate to fall significantly. He also says he thinks housing may turn around sooner than many think.“Unemployment will fall significantly, in my view, when we get back up to a million housing starts,” Buffett tells Charlie Rose. “We’ve recovered on corporate profits, we’ve recovered in terms of getting the banks back in shape— banks are in good shape now—we’ve recovered in all kinds of areas. Corporate America is doing fine in most areas. It’s not doing fine in things tied to residential construction. That won’t come back until we work off the excess inventory. But the amount of excess inventory is not as high as a lot of people think, in my judgment.”Buffett says he thinks the housing market could work off its excess inventory before mid-2013. The broad impact of the housing market, which impacts not only home builders but other industries (carpet companies are one example), is what’s needed to make a big dent in the unemployment rate, he says. When the U.S. gets back up to a million housing starts a month, Buffett says the unemployment rate will fall below 7%.

next Steps

Meet with a Prudential California Realty  real estate sales professional like us, along with a home mortgage consultant from HomeServices Lending. He can review your specific situation and make appropriate recommendations including:

• Reviewing a list of the top 5 values in your area of interest

• Access to low down payment loans like 0% VA; 3.5% FHA and 10% conventional loan programs

• Rent versus buy analysis

• For investors, a Cap. rate and cash flow analysis for multi-family complexes

• Rate updates on the loan products of interest

• New listing, price change and status change alerts on the homes you really like.