Why NOW is the Best Time to Invest in U.S. Real Estate (Part 1)
Every good investor knows there’s a time to buy, and a time to sell. In the United States, it’s definitely buy time.
You may have read that the real estate sector is still sluggish and reeling from the effects of the economic downturn, but the fact is that the market is moving—and the direction is up. While there might not be explosive growth, there are definitely steady gains.
This makes right now the perfect time to strike, before prices skyrocket.
In this two-part article, we’ll present the latest findings from across the country, and paint a comprehensive picture of the current rise in the United States real estate market.
Now entering recovery mode…
After years of recessionary trending, financial experts agree that the real estate sector is finally on the rebound. Retail housing prices are rising, and the distressed property market is recording positive gains.
Mike Castleman, founder and CEO of Metrostudy, recently stated that the number of new homes being built in the United States is at an all-time low. In a survey of 41 cities, his company revealed that in 2006, there were 343,000 homes for sale. Today, that number is down to just 78,000.
What does this mean for the real estate market? Demand is catching up to supply, and homes on the market are expected to move within three months.
Other experts weighing in include Karl Case and Robert Shiller, the creators of the S&P/Case-Shiller Home Price indices. In a recent interview with Fortune magazine, Case discussed the decreasing number of newly built homes and the effect of this trend on the market, saying, “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.”
More renters are becoming homeowners
With the cost of rental property increasing across the country, home ownership is looking like a far more attractive option to many Americans. Low housing costs are allowing more people to buy homes than ever before. In non-distressed regions like Texas, San Francisco, and Virginia, areas that received only minor blows during the 2008 slump, the real estate market is swinging up as mortgages become more affordable than renting.
There is no real estate bubble waiting to burst right now. In fact, the housing sector is steadying—largely due to the historic decrease in new construction, combined with a sharp drop in pricing.
The bottom line for investors
Houses are affordable again, and now is the time to buy homes in the United States.
Across the country, housing markets are poised for recovery—both those regions that pulled through the slump relatively unscathed, and those that were hardest hit. This is due to a combination of low prices and a lack of new-built homes. The key to recovery lies in generating enough demand to reduce resale inventory and pushing new homes to the forefront of the market.
Experts predict an increase in home prices for non-distressed markets, at a rate of 3 or 4 points faster than inflation rates. Smart investors who buy now can take advantage of the impending price hikes.
In part 2 of this article, we’ll discuss the recovery of distressed markets, and strategies for buying now with profit in mind.