Tag Archives: Wall St. Journal

Will Real Estate Turn Around in 2011?

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Is relief finally on the way in 2011? The Wall St. Journal recently published an article indicating that 2011 could be the year real estate turns around. It’s hard to be sure, but there may be some good news in 2011 about the nation’s struggling housing market…or at least, the bad news could come to an end.

Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. Reasons to be optimistic have been sadly lacking since the housing bubble burst.

Last week we learned from the widely watched S&P/Case-Shiller that the home-price index fell 1% in December; its fifth straight decline. But what’s new? In this case, what goes down must come up. If forecasters are correct it might make sense to jump into real estate. The trick is avoiding getting burned again, and it doesn’t necessarily mean owning a home.

Let’s recap a few economic signs that seem to support the belief that a bottom is close.

Houses Are a Good Deal

Housing is the most affordable it has been in decades – analysts consider not only home prices but average family incomes. Nationally, the cost of a house is the equivalent of about 19 months of total pay, the lowest level in 35 years.

“Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own,” says Michael Larson, a real-estate analyst at Weiss Research in Jupiter, Fla.

In the end, it will be affordability that will drive people to buy homes. But what about timing?

Consider this: In some markets, home prices have fallen by half or more since 2006. Even if prices fall another 5%, it’s a small margin in the grand scheme.

Investors Stepping Up

One of the best indicators that the market is nearing a bottom is when investors are buying up houses and condos, in some instances paying entirely in cash.

Take Miami again. Last year, more than half of all transactions were made entirely in cash, according to a recent report in The Wall Street Journal. That compares with 13% of deals in the last quarter of 2006, the height of the bubble. Similarly, in Phoenix 42% of sales in 2010 went to all-cash buyers, up threefold since 2008. It seems like these investors are betting on a rebound in the near future.

Plan to Stay Put

Buy and hold. While the good news is that the worst of the housing crash might be over, the bad news is that the fast gains of the glory days of 2005 and 2006 won’t be back any time soon. To avoid heavy losses and driving down neighborhood values, plan to own for the long-term…10+ years is a good bet.

Below is a graph from AOL Real Estate showing home prices in the Kitty Hawk, NC real estate market. With Kitty Hawk home prices being sold far above state and national averages, the OBX may be more fortunate than we assume.

The OBX – a strong real estate market getting stronger in 2011?! The magic 8-ball seems to be pointing to yes.

AOL Real Estate - Kitty Hawk - 3.2.11

AOL Real Estate - Kitty Hawk - 3.2.11

Vacation Home Real Estate Market is on the Rise

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One of the first rules-of-thumb of real estate is that all real estate is local.  It’s easy to get caught up in the hype (good and bad) around the national real estate market, but in the end, national numbers do not equate to local numbers.  Every locale is unique, with distinctive attributes that help determine the rise or decline of the real estate market regardless of how the rest of the country is performing.  Yes, there are overriding factors such as mortgage rates and credit availability that will affect all markets, but these factors pale in comparison the local market conditions.

To help illustrate the importance of local market conditions, the Wall St. Journal ran an article yesterday pointing out that despite poor projections for the overall housing market, vacation communities performed very well in 2010 and are projected to have a strong year in 2011.  The Journal points out that “sales in many vacation communities across the U.S. soared last year to levels not seen since boom times, driven by deep discounts, cash purchases and buyers’ rising stock portfolios.”

The market for vacation homes, based on local sales data, appears strong.  The Wall St. Journal mentions that “the comeback, has been helped by gains in the stock market and an improving economy, which have made wealthier Americans more upbeat about the future,” and according to the National Association of Realtors, one in 10 real-estate transactions in 2009 was for the purchase of a vacation home.

We are still crunching the numbers from 2010, but a quick look at recent sales shows positive signs for the Outer Banks; multiple offers on homes, homes selling for asking price, homes going under contract in weeks rather than months…or even years.

National numbers are important, but local numbers tell the true story.  With mortgage rates at all-time lows and home prices significantly reduced, now could be a great time to jump into the OBX real estate market.

We’d love to help you find the house of your dreams:  www.ColdwellBankerOBX.com.

Ten Reasons to Buy a Home

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It’s a tough economic climate.  No doubt about it.  Housing has been a bit of a rollercoaster, and there’s no clear end in sight.  But every dark cloud has a sliver lining, and the Wall Stree Jornal recently published an article that finds 10 silver linings for all the house hunters; Ten Reasons to Buy a Home.

1. You can get a good deal.

2. Mortgages are cheap. 

3. You’ll save on taxes.

4. It’ll be yours.

5. You’ll get a better home.

6. It offers some inflation protection.

7. It’s risk capital.

8. It’s forced savings.

9. There is a lot to choose from.

10. Sooner or later, the market will clear.