Affordable Real Estate – Part I

by Mary Bryan Fields

Housing, A Universal Desire
Because shelter is one of the most basic of all human needs, housing is a singularly unique product, a commodity that is universally desirable.  The owner of real estate has the use and enjoyment of an asset, which not only meets a basic need, but which also has the potential to appreciate over time.  Therefore, whether purchased as a primary or vacation residence, real estate has both emotional and investment appeal.  While a stock certificate may appreciate in value, it’s not very useful!  Real estate is so useful that consumers who don’t own housing are willing to pay rent for occupancy.  Therefore, housing is one of the few assets capable of producing an income to offset the costs of ownership.

State of the Housing Market- Hoping!
The current real estate market is a “hoping” market.  Buyers are hoping for lower prices and sellers are hoping for another seller’s market.

Hope is not a strategy!

A successful strategy is based on fact.  Here is a fact… housing is more affordable now than anytime in the last 12 years.  While prices have rolled back to pre-2000 levels, interest rates were last this low during the 1950’s.  According to Lawrence Yun, Chief Economist of the National Association of REALTORS, “the monthly mortgage payment for a median-priced home, purchased with FHA-insured financing, is $1,150, down from $1,658 in 2006.”  The current real estate market consists of, to borrow a phrase from the movies, a “perfect storm” of conditions favorable to purchasers.

Confidence in the Market- Own in the Right Location
Like politics, real estate transactions are local.  Market confidence is based on the substance, and future prospects, of the local economy; a growing economy is a positive influence on the future value of real estate.  Today’s purchaser acquires a home at the best possible value and a useful, long-term asset, which, in the right location, becomes a better value over time.

A successful strategy for owning real estate is location, location, and timing.