Seemingly, in every neighborhood across America, there are empty homes. Empty. What’s more, many of these homes have been empty for years now. I’m not talking solely about fixer-uppers in rundown neighborhoods, but about perfectly nice homes in perfectly respectable neighborhoods, as well. In my neck o’ the woods, which is about the average size of a typical neighborhood, I count roughly 10 empty homes. Some are still at the point where there is an active sales effort ongoing…while the others are basically now “ghost” houses, with no signs of life or activity of any kind.
As you would expect from a housing market that has offered us so many empty houses from which to choose, the prices of these very available units are low, to the point of being sickeningly low if you happen to be the owner. Buyers are, in many cases, getting the deals of a lifetime on real property in the United States, and yet…the market is not moving upward in any noticeable fashion at all.
A recent article in The Boston Globe about the current state of home buying in America mentioned a property manager, of all things, who has decided to continue renting expressly because she has watched the value of the homes of her friends and acquaintances fall so far in the last few years. She is deciding not only against buying right now…she’s thinking she may never buy.
If you’ve decided to continue renting presently because you believe that the market will continue to fall into the foreseeable future, that’s one thing; that is a person who actually is paying attention to what’s going on, and has developed a strategy, of sorts, to secure the best deal possible when he ultimately buys. However, what’s disconcerting to financial professionals is to hear so many renters decide against buying real property altogether…because of what has happened over the last few years
Count me as one financial pro who has always felt that home ownership is not the no-brainer that it is generally touted to be. There are a lot of examples of people who, for one reason or another, are better off remaining renters. Those people have always existed…the person who has little patience for maintenance is a good candidate for lifetime renting, as is the person who sees himself moving very regularly. However, if you are an otherwise good prospect for home ownership who is simply running and hiding because of what the market has done recently, that is a major mistake. Although I have never considered the purchase of a primary residence to be an investment, per se, it is still something that carries with it some investment-like features, and thus is open to be considered in terms of timing of purchase; right now, it’s a great time to purchase.
Methinks the aforementioned property manager will buy at some point in the future. You know when she’ll do it? After prices have already begun to rise, and after mortgage interest rates do the same thing. For many people, they quite unnecessarily set themselves up for future disappointments by waiting too late to take advantage of great deals staring them in the face. You don’t even have to trust your instincts in conditions like these – simply trust the facts.
Even taking into account the historic collapse in property values over the past few years, real estate has increased in value at a rate of a little over four percent per year over the past 20 years. That’s another thing – “historic.” What are the chances that another collapse of “historic” proportions will follow anytime soon?
In the end, it’s OK to pull over to the side of the road and wait for the storm to pass before continuing…but you also have to be willing to recognize when it has passed and when the sun is back out…or you’ll just remain forever at the side of that road.
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Bob Yetman, Editor-at-Large at Christian Money.com (www.christianmoney.com), is an author of a variety of materials on personal finance and investing, as well as on topics of fitness and self defense, to include the book Investor's Passport to Hedge Fund Profits (John Wiley & Sons, Inc.) and the unarmed combat training DVD Thunderstrikes – How to Develop One Shot, One Kill Striking Power (Paladin Press).