IT’S TIME TO BUY A HOME!

In the past month four different respected financial resources said the same thing:

IT’S TIME TO BUY A HOME!

The four are The Wall Street Journal, Forbes Magazine, JP Morgan Market Insights and MarketWatch.com

Monday, we gave you the links to four different articles that came to the same conclusion: it’s time to buy a home. Today, we want to take a closer look at one of the sources, the JP Morgan’s Market Insights report. Right from the beginning, the paper identifies the greatest challenge in today’s housing market: consumer emotion. They attempt to overcome that emotion with logical reasons why now is the time to buy a home. They break it down to the following.

Price-to-Income Ratio

One measure of housing values is the ratio of personal income to home prices. The report explains where we are today:

“Since 1966, the median price of an existing single family home in the U.S. has varied between 150% and 251% of personal income per household. However, roughly three-quarters of the time it has been in a relatively narrow band between 185% and 230%. In September 2011, the ratio was just 153%, implying that to get back to an average price to income ratio, home prices would have to rise by about 27%.”

Current Mortgage Interest Rates 

With current 30 year mortgage rates, housing payments are at historic lows as compared to personal income.

“During the week of October 7, Freddie Mac reported that mortgage rates had fallen to an average annual level of 3.94%. Assuming the use of a fixed rate mortgage with 20% down, this would make the median mortgage payment on a single family existing home just 6.9% of per household personal income, compared with an average of 14.4% since 1966.” 

Monthly Rent vs. Monthly Mortgage Payment 

Is it less expensive to own a home or rent a home? The answer to this question helps families make the decision whether or not to buy a home. The report explains:

“By the third quarter of this year, we estimate that the implied median mortgage payment had fallen to just 78% of the median asking rent…”  

Bottom Line

The paper comes to the conclusion that now is the time to buy.

“The numbers on housing have an important message for American families today, and particularly younger families setting out on life’s great adventure: Five years ago, at the peak of the home-buying euphoria, it was emphatically a time to rent. Today, when home ownership is depreciated more than ever before, the numbers tell us it is a time to buy.”

I agree.

courtesy of the KCM blog

 

REAL ESTATE IS STILL THE BEST LONG TERM INVESTMENT

BELOW IS A STARTLING GRAPH!  IT DETAILS AN INVESTMENT FROM JANUARY 2001 TO NOVEMBER 2011. 

THIS IS THE TIME TO BUY!!
 

Return on Investment Since 2000

COURTESY OF THE KCM BLOG.

Jeanne Jordan

Home Sale Prices Increase

The report below, an arguably relevant and positive housing report, appeared in a side-bar on page one of the Chicago Tribune Business Section last week. My question is, why wasn’t it on the Front Page? Read on…

Home prices in the Chicago area showed expected summer strength in July, posting a fourth consecutive month-over-month gain, according to a widely watched measurement of home values released Tuesday.

Still, the S&P/Case-Shiller Home Price index showed that despite a 1.9 percent improvement in prices in July, compared with June, home values in the Chicago area were 6.6 percent lower than a year ago, putting them at levels not widely seen since March 2002.”

September 27,2011/ By Mary Ellen Podmolik/ Tribune staff reporter

Yes, prices are lower this year than last year.  However what we should be watching now is the month-to-month numbers.  This is what will tell us when decline has ended.  As of July (the latest  that numbers are available for) we have seen our fourth month in a row of improvement, albeit small improvement, it is movement up in sale prices, rather than down.

If this continues for a fifth month, let’s hope it makes the Front Page!

Jeanne Jordan, CNC, SFR

 

DuPage Habitat For Humanity Restore

Let’s here it for Dupage Habitat for Humanity!   Finally, a resale store for DIYers,  homeowners on a budget, or  for those who simply choose recycling on moral and ethical grounds.

The DuPage Habitat for Humanity ReStore in Addison stocks items such as appliances, cabinets, electrical supplies, countertops, plumbing, lighting, tools, hardware and much more. They also accept new and gently used household construction materials that are cleaned and then resold to the public at reduced prices.  All profits fund DuPage Habitat and their goal of building affordable housing in DuPage County.  Stop in for a visit!

 DuPage Habitat for Humanity Restore

869 S. Rohlwing Road

Addison, IL

Dupagehabitat.org