Real Estate:  It’s Time To Buy Again

A recent CNNMoney.com article posted by Shawn Tully, senior editor-at-large, declares:

Forget stocks. Don’t bet on gold.  After four years of plunging home prices, the most attractive asset class in America is housing.

“… I’ve never seen a shortage of new construction like the one I’m seeing today,” declares Mike Castleman, founder and CEO of Metrostudy.  Metrostudy tracks real-time data on the country’s inventory of new homes and covers 19 states, or around 65% of the U.S. housing market, including all the ones hardest hit by the crash: Florida, California, Arizona and Nevada.  The company’s client list includes virtually every major homebuilder and bank.

The key figures that Metrostudy collects are the number of homes that are vacant and for sale in each city, and the number of months it takes to sell all of them.  Together those figures measure inventory, the key measurement in determining whether a market has a surplus or a shortage of new housing.

Today Castleman is seeing an extraordinary reversal of the new-home glut that caused prices to sink just a few years ago.  In the 41 cities Metrostudy covers, a total of 78,000 houses are now either vacant and for sale, or under construction.  That’s less than 1/4 of the 343,000 units in those two categories at the peak of the frenzy in mid-2006, and well below the level of a decade ago.  “If we had anything like normal levels of buying, those houses would sell in 2.5 months,” says Castleman.  “We would see an incredible shortage.  And that’s where we’re heading.”

In a interview with Fortune, Karl Case, who together with Robert Shiller created the S&P/Case-Shiller Home Price indices, says “the lack of new home building is a huge help that a lot of people are ignoring. People think I’m crazy to be optimistic, but housing is looking like the little engine that could.”

Two basic factors are laying the foundation for a recovery in residential real estate:

1. the historic drop in new construction
2. a steep decline in prices (about 30% nationwide since 2006, and as much as 55% in the hardest-hit markets)

The new affordability will gradually attract Americans back to buying homes, and the return of the homeowner will start raising prices in many markets this year.

In 28 out of 54 major markets, it’s now cheaper to pay a mortgage and other major costs than to rent the same house.  In all the distressed markets, owning now beats renting by a wide margin.  A major reversal from 4 years ago.  In Miami the average rent is now $1,031 a month versus the $856 it costs to carry a ranch house or stucco cottage as an owner.

The true disaster areas for housing since the bubble burst have been Sunbelt cities such as Las Vegas, Phoenix and Miami.  But people always want to live in those sunny locations, and their job markets are starting to recover, albeit slowly.  In foreclosure markets the inventory problem is far greater because it includes not just traditional resales homes, but millions of distressed properties.  Fortunately those houses are now such a deal that investors, including lots of mom-and-pop buyers, are purchasing them at a rapid pace.

The outlook is brightening for Phoenix, Las Vegas, Miami and parts of Northern California.  A big positive is the tiny supply of new homes entering the market.

Mike Castleman tells editor-at-large Shawn Tully “… the naysayers are about to get a big surprise:  rising prices for new homes.”

For more information on real estate in Aventura and the South Florida area please contact me at (305) 329-4929 or solovay.m@ewm.com.

Is Now The Best Time To Buy A House?

TODAY SHOW real estate expert Barbara Corcoran and personal finance expert Carmen Wong Ulrich explain why now may be the best time to buy a new home.

Barbara says:

I totally believe it’s the time to jump in.  There’s very little upside to waiting around and doing something later.  You’ve got cheap money, cheap prices, lots of homes to choose from. Why wait? It doesn’t make any sense

With regard to getting a mortgage right now, Carmen says:

Mortgage applications are at 15 year lows because it’s really tight.  You’ve got to have great credit and a solid down payment.  Mortgage lenders don’t want to absorb all the risk.  You have to have ample savings, outside of the down payment.  You need at least 6 months’ worth of mortgage payments in the bank and saved up.  Of course a great work history that you are employed really helps.  If you’re self-employed,  you’ve got to keep fantastic records.

While the spring is usually a time when home buying goes up, Barbara says:

You’ll see more houses coming on the market.  What  you won’t see coming into the market are lower prices.  You certainly aren’t going to see cheaper money, especially with what’s going on with fannie mae.  Everything is going to change in the financing game.  You’ll see a tougher spring to buy in.  Now, again, is the better time to buy.

Carmen says:

If you’re in a position to buy, don’t wait for the interest rates to go lower again.  If you’re in a position to get that mortgage, get it now.

If you are in a position to buy, now is the time.  Contact me at (305) 329-4929 or solovay.m@ewm.com for more information on what’s available in your neighborhood.

Do You Believe It Is A Good Time To Buy A Home?

In a recent Keeping Current Matters blog post by Steve Harney entitled The First Question You Should Ask Your Listing Agent, Steve discusses whether now is a good time to buy a home.

The Wall Street Journal last week stated:

With home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today.

Donald Trump was just quoted saying:

I’m pretty sure this is a great time to go out and buy a house.  And if you do, in 10 years  you’re going to look back and say, ‘You know, I’m glad I listened to Donald Trump’.

John Paulson, a multi-billionaire hedge fund operator and the investment genius who made a killing betting against housing a few years ago, is now bullish on residential real estate market.  He recently said:

If you don’t own a home, buy one.  If you own a home, buy another one.  If you own two homes, buy a third.  And, lend your relatives money to buy a home.

A recent Gallup Poll showed that 67% of American’s think that now is a ‘good time’ to buy a home.  The Gallup Organization went on to say:

Overall, there is good reason for most Americans to think now is a good time to buy a house.  Interest rates remain near historic lows.  Home prices are down sharply, providing many incredible buys.

An iconic financial paper, the country’s most famous real estate investor, the most successful prognosticator of the housing market and 2/3 of all Americans say now is the time to buy a home.

If you have come to the same conclusion and want to buy a home or condo, I am ready to help you.  Please contact me at (305) 329-4929 or solovay.m@ewm.com.

Tax Credit Program

Learn how the home buyer tax credit can benefit you.  Ron Shuffield, President of EWM Realtors explains.

Click here to view the embedded video.

For more information contact me at (305) 329-4929 or solovay.m@ewm.com.

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American Recovery and Reinvestment Act of 2009

Eligible buyers must close by December 1, 2009 so it’s important to select a residence soon to make sure you don’t get left out.  The credit applies to first-time homebuyers, as well as individuals who have not owned a principal residence in the 3-year period prior to the purchase, and applies to homes purchased between January 1, 2009 and December 1, 2009.  The tax credit is equal to 10% of the purchase price, but capped at $8,000.  Certain income restrictions apply so be sure to visit www.irs.gov to learn more about eligibility requirements and limitations.

The credit:

• applies to purchases that close before December 1, 2009
• applies only to homes used as the taxpayer’s principal residence
• reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar
• is fully refundable, meaning the credit will be paid out to eligible tax payers, even if they owe no tax or the credit is more than the tax owed

Recovery:  First-Time Homebuyer Credit

First-Time Homebuyer Credit Questions and Answers: Basic Information

For more information please contact me at (305) 329-4929 or solovay.m@ewm.com

Is buying new underwear a sign of economic times?

Take a look at this video by Adam Kuperstein of NBC Miami.

I never really thought about it this way, but it makes sense.

Let me know what you think about this and leave me a comment.

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