I’ve been doing a bit of research to justify my strong theories about this being the time to buy – and I found it in a report from
JPMorgan. Top strategists in their Funds group believe that, despite the remaining economic troubles left over from 2007, investment opportunities still exist, and they exist in real estate.
Not only are the prices at an all-time low, but we need to remember that continued population as well as lender/borrower caution have both increased pent-up demand. Home building has significantly slowed in the past 3 years so this opportunity is somewhat fleeting because, as soon as the demand picks up, building will accelerate quickly, along with prices.
I’ll throw a number out there – Median mortgage rates have gone down to an average of 6.9% of household income, compared with an average of 14.4% in 1966 and are now at the lowest level in modern history. On October 7th they went down to 3.94%. As scary as this may sound, it presents an opportunity for long-term financial gain for those who buy “much-cheaper-than-average” housing with much-cheaper-than-average” long term financing.
So what’s the real takeway from the experts? 5 Years ago, it was time to rent. Today, the numbers point to a time to buy.
Sourced from JP Morgan’s Asset Management Group, in “Housing: A Time to Buy” by Dr. David Kelley and David Lebovitz.