Thursday, January 17, 2008

Are Homes Really a Good Investment?—Is NOW the time to Buy a House?

Annual housing numbers were released this week and there were no surprises that the housing market was down in 2007. I say there were no surprises because the double digit increases in value seen a few years ago throughout the Twin Cities and Minnesota could not continue. Everyone working in the real estate industry knew the market was ready to correct.

In the north and east metro counties (Anoka County, Chisago County and Washington County), I have notice the market correction building for the past few years. In the northern suburbs we feel the trend sooner than in the heart of the metro. So the slower market is no big news bulletin.
**View Twin Cities Housing Statistics Here**

The real news is that the real estate market is poised to turn in the other direction.
Who wouldn’t want to get in on the ground floor of a historically-solid performing entity?

Though real estate has peaks and valleys, it is still a good investment. Even with the recent price drop, Twin Cities home values are up significantly from where stood in the mid-1990’s. The astronomical, unrealistic pricing is gone but the core value is holding strong. Real Estate remains a good investment if people once again start treating it as such.

Glenn Dorfman of the Minnesota Association of Realtors (MAR) suggests we all look at the real estate market with a dose of realism. His recent podcast, “Not optimism, not pessimism, but REALISM...” explores the idea that everyone must look at real estate as the long term investment that it is.

Facts and common sense are what a strong real estate market is built on. Outrageous increases in property value are an abnormality in the market. Historically, housing has shown continuous, MODERATE increases. Due to the outrageous increases in the past decade, the market needed to correct.

So what does this mean to the average home owner? Think of your home purchase as a LONGTERM investment. Almost every financial planner I have ever met would strongly advise against ever borrowing against a 401K program. It is a long term investment for your retirement and the penalties are harsh if not repaid.

Borrowing against the equity in your home has similar consequences. So why would anyone think that removing equity from their home is a smart option?

So is NOW a good time to buy? In a word, Yes! Smart buyers will get in the game! Low interest rates, negotiating sellers and massive inventory give a savvy buyer options! There is no way of telling whether any market has hit bottom until the prices start going up again. Work with a Realtor, knowledgeable in your community to find a good deal!

As Dorfman says, “residential homes are long term investments in the same way that stocks are...flipping, greed and making fast money is mostly myth.”


If you are buying, selling or relocating to Minnesota and need help from a professional Realtor, give me a call or visit my website for a FREE Relocation Packet. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.