Housing Numbers Showing Improvement: Good Time to Buy?VW Staff
Housing only a few years ago was one of those investments that seemed to always make money. Real estate was booming, people were buying houses and the value of the house kept rising. It was a much simpler time back around 2004-2007. Then, the mortgage crisis hit combined with a housing bubble. Banks were giving people mortgages that didn’t even have any income and they would turn the mortgage into a security that was traded. Although it made bankers a lot of money relatively quickly, the true cost of the operation eventually caught up to them (just ask Lehman Brothers).
Four years later we are still in the housing crisis but the outlook is much more upbeat and showing signs of recovery. In fact, houses have not been this cheap since the 1940s, begging the question is this the time to buy a house?
Yes. Housing prices are at all time lows in some areas and on top of that mortgage rates are the most affordable they have been in decades. If you want to buy a house or thinking of buying a house, get in there because there may not be another buying opportunity like this for a long time. On top of that, the US government has tax incentives if you a buy a house. This means you will be getting a tax break if you buy a house. Clearly we are just above the bottom of the market making it easier to buy a house because prices are still cheap, yet you know the worst is over.
Warren Buffett has been a long time optimist when it came to the housing recovery and in his annual letter to shareholders, he said to his investors that he was “dead wrong” on his prediction that housing will recovery within a year or so. He went on to say that housing is still in the “emergency room” but is doing better. Despite admitting his mistake, he believes that housing is showing signs of recovery. On top of that, as unemployment falls, housing rises. This is because once people get a job or a better job; they want to increase their standard of living. To most people, that means buying a house and they will go buy a house.
The bottom line is housing may still have a year left until we start to see the housing market start to get back to normal but right now is a buyers’ market if you are looking for a house. There has not been a better time to buy one and there may not be another opportunity for many decades to come.