On August 5, 2011, Cezary Podkul of The Washington Post wrote an article titled Investing in real estate on the rise.
Stock portfolio took a huge hit during the financial crisis. Interest rates are only going down. Investing in real estate is appealing to a growing number of people (especially in the Washington area).
Even Jean Chatzky, on “The Today Show” on August 16, 2011, said, “If you’ve ever thought about being a landlord, now might be a time to buy a property to rent out because there’s a great demand, particularly for single family homes as rentals.”
As of Thursday, August 18, 2011, Freddie Mac’s weekly rate report said a 30-year fixed rate mortgage fell to 4.15 percent in the week ending Aug. 18, the lowest since it began keeping track in 1971. A 15-year fix fell to a record low 3.36 percent, down from 3.50 percent last week.
Do your and your family a financial favor – take five minutes to read (below) excerpts from the article.
If you’re an investor or have been waiting for the right time to buy, contact The Speicher Team today.
Investing in real estate on the rise
Wayne Cummins’s stock portfolio took a huge hit during the financial crisis, so he has been hanging on to more cash than usual instead of investing it. But with the balance slowly building up and interest rates only going down, something had to change.
“I’m just looking for a better return… than .0003 percent on a savings account,” Cummins said. But he wasn’t yet ready to jump back into the stock market, which this week posted some of the worst returns since the financial crisis. And with gold near record highs and a U.S. credit downgrade still threatening the bond market, there seemed no safe place to go.
Except next door.
In July, he put some of that spare cash toward the purchase of a $490,000 townhouse across from his own. Now, he hopes to rent out the home and watch its value appreciate as the years pass.
With mortgage rates at their lowest level of the year and home affordability at a 40-year high, the idea of investing in real estate is appealing to a growing number of people. Investors have purchased about 20 percent of the existing homes sold this year, up from 17 percent last year and the highest level since 2008, according to the National Association of Realtors. While many are probably seasoned investors chasing after cheap foreclosures, some are people like Cummins who are dabbling in real estate because they think it makes good financial sense.
So far, Cummins has reason to expect that his home’s value will appreciate. The Washington area was not as badly hit by the foreclosure crisis as many other parts of the country, and therefore the region’s home values have held up relatively well. This region is the only one of the nation’s 20 major metropolitan areas to consistently post price gains this year, according to the closely-watched Standard & Poor’s Case-Shiller index.
Market experts credit the fundamentals to the region’s ample supply of jobs, which in turn fuels demand for homes. Government spending has kept those jobs going during the past few years, lessening the impact of the nation’s dismal unemployment trends and enabling people to buy homes, lock in low rates and have strong pricing power if they decided to rent them out.
This week, the average rate on a 30-year fixed rate mortgage dropped to 4.39 percent, the lowest level in more than eight months, according to Freddie Mac. The average for the 15-year fixed-rate loan fell to 3.54 percent – the lowest level since Freddie began tracking those rates in 1991.
Article excerpts from Cezary Podkul of The Wasington Post, Published: August 5
If you’re an investor or have been waiting for the right time to buy, contact The Speicher Team today!