Sunday, November 18, 2007
Realtors Say 2007 will be the Fifth Best Year on Record
It's not all gloom and doom in our business.
From National Realty News:
“In some ways, the extended real estate boom from 2001 to 2005 created unrealistic expectations that housing is a short-term high-yield investment,” said National Association of Realtors Chief Economist Lawrence Yun. “2007 will be the fifth best year for housing on record. Places like Houston, the Kansas City area, Indianapolis, and the vast middle section of the United States offer affordable prices and continued job growth. On either coast, Seattle and Raleigh, N.C., remain solid. And markets that experienced recent growth declines – like Boston, Denver, and Washington, D.C. – have already shown signs of recovery. In short, all real estate is local – conditions vary greatly from one city to the next.”
Yun explained that while the recent rise in foreclosures and delinquencies has dampened consumer confidence in real estate, these problems have been concentrated in the subprime market. “For buyers who qualify for conventional financing, mortgages are available at favorable rates,” said Yun. “Major FHA reform will also help first-time home buyers enter the market and will provide safer alternatives for many subprime buyers. FHA market share for home purchases is expected to triple over the next three years, from an estimated 4 percent in 2007 to an estimated 12 percent in 2009.”
Responding to recent questions about the current value of homeownership, Yun said, “Buying a home is not a quick-in, quick-out investment, like buying a stock. Homeownership builds wealth over the long-term.”
To illustrate his point, Yun explained that over 10 years, a $10,000 investment in the stock market at a normal 10 percent market rate of return would yield $23,600. The same investment as a down payment on a $200,000 home at a normal appreciation rate of 5 percent would return nearly 5 times the stock market return, at $110,300.