Post written by Frank Roche, President of Roche Realty Group, Inc.
Wall Street is suggesting that a real estate industry that led the economy into the abyss is what ultimately will carry it back out. More economists are seeing more evidence of a considerable recovery in real estate nationally, at the same time commercial real estate is climbing as evidenced by The Substantial Returns report by REITS. Personally I’ve invested in a number of high quality REITS and the returns of around 18% have been impressive this past year.
Also, weekly mortgage applications rose last week rebounding from three consecutive weeks of declines according to the Mortgage Bankers Association.
In residential real estate, in some of the warm weather markets like Miami and Las Vegas, prices have risen close to 20% over the previous year. There certainly are exceptions like the 20% figure previously stated; however, The Shiller Home Price Index (which is much broader) indicated values have gained modestly approximately 4.3% for the year.
That’s why it’s so important to focus on our local market…As we know, not all markets fluctuate at the same level. You can see from our previous blogs that our local market is beginning to heat up as evidenced by a nice increase in unit sales throughout the Lakes Region.
What’s the point?
All asset classes move up and down in varying cycles. We saw what happened with stocks in 2008. Now look where they are. When there was blood on the streets, did you act?
Real estate as an asset class has suffered immensely since 2007. We have seen price reductions every year and prices have been discounted 30-34% from their highs. At the same time mortgage rates have dropped to record 45-year lows. Sounds like there’s blood on the streets; however, history shows the “window of opportunity” does not last forever. It sounds to me like real estate is presently the #1 asset class to be acquiring at the present time.
The Mortgage Brokers Association expects the 30 year fixed-rate mortgage average rate (currently at 3.5%) to rise to 4.5% by the end of this year.
Sounds to me like it’s the perfect storm. As they say, “timing is everything.” Find a good realtor who you feel comfortable working with and look for that golden real estate opportunity…they are out there!