Top 7 Reasons To Buy Residential Properties Now
By Ed Craine
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The stock market is up, and the economy seems to be heading in the right direction, which means that now is the perfect time to purchase a residential property. Why now? Funny you should ask. Here are the top 7 reasons why itís a fantastic time to purchase a home.
- Highest Affordability Rate in Years
After the peak of the market years ago, home prices have been steadily declining. For buyers, this equates to a much more reasonable purchase price, driving affordability up. In fact, in most markets (aside from those in extremely expensive locales), home affordability hasnít been this high in 5+ years.
- Economic Recovery Appears Underway
As consumer and investor confidence grows, the economy as a whole begins to take an upward swing. The recent rally in the Stock Market is indicative that there is at minimum, quite a bit of optimism about the future of our economy.
Once people begin to feel comfortable in once again making large purchases, like a home, demand for homes will grow. In coming months then, as more and more buyers get back into the market, the supply of homes will decrease. The law of supply and demand shows that when demand for homes increases, so does the price. But currently, the supply is still outweighing demand, (meaning that as a buyer, you can still snatch up an incredible deal).
- Demand for Lower End Properties Is On The Rise
The demand for less expensive properties appears to be on the rise, which is indicative that buying is preferable to renting for many consumers. This elevated interest in lower priced properties, shows once again that consumer interest will soon result in a decreased supply, driving prices up. But currently, prices remain low.
- Lower Priced Properties Are Receiving Multiple Cash Offers
Savvy investors and consumers with cash or cash equivalent are scooping up lower priced homes at incredible discounts. If youíve got a lot of liquidity or capital on hand right now; youíre in an excellent position to buy at amazing discounts. As more people continue to come back into the market, with financing as opposed to cash, the discounts will evaporate and prices will return to higher levels.
- Investor Interest Is Piqued
Favorable prices coupled with excellent rent to price ratios have piqued the interest of investors, who have been flocking back into the real estate market over recent months. Their increased interest is testament to what a good time it is to buy, and furthermore why you ought to consider acting quickly before the supply decreases.
- Ability To Buy Well Below Replacement Cost In Many Markets
In many markets, prices have dropped so much that it is actually less expensive to buy a home than it would be to build it from scratch. And thatís even if you got the land for free! Times like these are rare and fortuitous times to be a buyer. The last time this phenomenon occurred was in the early 1990ís. Smart investors made a lot of money buying up properties that had dropped to bargain prices, only to see them increase in value as the economy recovered.
- Interest Rates Will Likely Increase In Coming Months
Interest rates on fixed mortgages still remain incredibly low; in fact they are still historically low. However, as history has proven time and again, the markets are volatile and subject to major swings. And as the economy improves, rates will start to rise if history as any guide. Currently though, rates remain well below 6%, making it a fantastic time to purchase a residential property.
Ed Craine is CEO of San Francisco based Smith Craine Finance, an award winning mortgage brokerage. He was appointed Vice President of CAMB in 2007. Ed serves as an Executive Director for BNI, and is a contributing author to several NY Times Best Selling Books. Visit http://www.smithcraine.com
Article Submitted On: October 27, 2009