Investing in Real Estate: Is Now the Time to Buy?

The bubble has burst! Foreclosures are at an all time high! Sub-prime lenders scandal! There has been no shortage of sensational headlines on the state of the real estate industry for the past 15 months.

This media attention – fueled by speculation from economists, financial advisors, real estate professionals and even politicians – has left some potential consumers concerned about buying in this market.  But the reality is now is the perfect time to invest in real estate.

Long-term, real estate ownership of three to five years continues to be one of the strongest investments you can make. Despite last year’s shift in the housing market, 2006 was still the industry’s third best market on record.  As an investment, sellers nationally have seen a median appreciation of 50% over the past six years. In the Northeast, that percentage is even higher with median prices of existing single-family homes rising 74% since 2000. This far outweighs the top producing mutual funds over the past five years which yielded returns of 37%-43%. 

Although more properties continue to become available, pricing has remained steady while interest rates remained low.  Nationally, prices rose just 1.3%, while in the Northeast pricing has dropped only 0.4%.  The industry is at a historically high level of inventory creating a buyer’s market.  Fueling this are predictions by Freddie Mac that interest rates, while currently in the low 6% range, will rise only slightly this year.

So don’t let the headlines mislead you.  Historically low interest rates, an above-average amount of inventory and stable pricing makes this an ideal market for buyers.

Jay Hummer, Regional Director
RE/MAX of New England