A recent Wall Street Journal headline read: “Why It’s Time to Buy.” As a Realtor scanning the business and real estate headlines, this was not one that I expected to see in the WSJ, but at the same time, I wasn’t surprised.
This is the second time (that I’m aware of) in the past four months that the WSJ has run a headline and article with this story. And as this article begs the question, who would have ever imagined that national real estate would be in a bear market for more than five years? Here we are with Standard & Poor’s/Case-Shiller metric indicating that we are now at a new low of 2002 price levels — and in some, more impacted regions as low as 1990s levels.
So, why the more bullish headline? Well, Moody’s Analytics, as its name would suggest, uses statistics to help make the case: “The ratio of home prices to income is now 20.9 percent lower than the 15-year average through 2010 and 12.5 percent lower than the 1989-2004 average. Prices are lower. Affordability is higher. And to round it all out, inventory is up and interest rates are still at 50-year lows. It is indeed time to buy!
Some of the other particularly interesting “sound bites” from the article are:
“As rates hover near historic lows, experts expect banks to ease borrowing standards over time.” This is news that is really news! Since the sub-prime fallout, when was the last time you heard that? “If prices stabilize, it could tip the balance away from fear and pull more buyers back in the market.” As we know, consumer confidence is a huge influence for market recoveries. “In several markets, it’s becoming cheaper to own than to rent.” And with more low down-payment loan products available, tenants are converting to homeowners in large numbers.
Another statistic that’s worth mentioning is the rate of increase in household formation. In 2008, newly formed households were at 578,000 — down from nearly 2 million in 2005. But last year, that number increased to 950,000, and Moody’s is forecasting an average of 1.2 million per year for the next 10 years! This trend alone is significant — pent-up demand will follow, according to expert demographer William Frey with the Brookings Institution.
If you believe what you read, then it’s time to buy. And if you believe what your Realtor tells you, it’s time to buy. Realtors are your trusted advisers when it comes to buying real estate — they are in the business 24/7. They know the best buys. They know where to get good loans. They know the business of real estate. Let yours help you when it’s your time to buy!