2009 Yr. End Market Conditions -
It Depends on Where you live!
Although the media has continued with constant "doomsday" forecast for the real estate industry the past 2 years, and predicting "bubble bursting" scenarios, the fact is every location is different and you can not compare the East Coast to the Mid West, the North to the Southeast, etc. or in many cases, not even one part of a state to another. Some areas of the country remain strong such as the Pacific Northwest. All real estate is local, and one must compare apples to apples when comparing markets. After several years of double digit decreases, many markets including the Frederick area (tied to the Washington D.C. market) is showing signs of recovery with home inventory down and sales continuing at a brisk pace. No doubt the tax credit (which has now been extended to "move-up" buyers who have been in their home for at least 5 of 8 years) has helped in the recovery and should continue to do so. Lawrence Yun, NAR's senior economist has offered several past examples and counter arguements to those who continue to promote the "wait and see" attitude. They are as follows:
Media Claim 1: The decline in new construction is a bad sign
RESPONSE: Home Builders are simply pulling back to avoid saturating the market and devaluing their product which is the responsible thing to do, and a healthy sign the industry is being managed intelligently.
Media Claim 2: The decline in construction jobs is a bad sign
RESPONSE: Job growth actually remains strong in many areas which is one of the factors that drive a healthy housing market.
Media Claim 3: The fact that housing prices have dropped for the first time in many years is cause for worry.
RESPONSE: Overall and especially in certain markets this is simply 200 steps forward and 10 steps back. There has been so much recent gain - doubling and even tripling of values in some cases--- that a comparativly minor correction is no cause for worry.
Some things to consider if you are considering the purchase of a home, but reluctant to take a chance.
You can NOT participate in the NEXT housing boom unless you are a HOME OWNER!
Home owners are not usually worried about fluctuatuins, new construction numbers, etc.
One of the reason for the recent decline is that speculators are leaving the market. over time this should result in more stability.
Mortgage rates are stable and in some case even retreating.
Rents are rising
Interest paid on a home loan is a tax deduction, rent is NOT!
Home owners accumulated an average of $184,400.00 between 1995-2004 while renters gained an average of only $4000.00.
Although there may be periods of highs and lows, in the long run owning a home remains one of the best investments one can make!
Please feel free to comment on this article. I welcome your feedback.
