The Wall Street Journal posted this question: Should first-time home buyers consider jumping into the market?
Eric Lascelles, chief economist at money-management firm RBC Global Asset Management Inc., told the Wall Street Journal that now is the best time to become a first-time home buyer.
Lascelles said that while the housing market, in general, is possibly still quite a few years from normality; nonetheless, today is a significant time to be a first-time home buyer.
“Affordability is the best it has been in 30 years, thanks to the combination of a 34% decline in prices since the 2006 peak and a historically low 4% average rate for a 30-year, fixed-rate mortgage,” the chief economist of RBC Global Asset Management Inc. said.
Lascelles said these are the affordability metrics:
• First, is how much monthly income a mortgage consumes; and
• Secondly, whether this is less costly than renting.
Lascelles calculated that home prices are now astoundingly 1/3 cheaper than the historical norm. He further cited the report of Trulia which shows that buying is cheaper than renting in 98 out of the nation’s 100 major markets.
While first-time home buyers are still contemplating on whether to buy a home now or later, Lascelles said, “Investors are already eating your lunch.”
The National Association of Realtors (NAR) reported that in 2011, sales of investment homes jumped to an astonishing 64.5%, from 749,000 in 2010 to 1.23 million in 2011.
Investment homes are residential homes bought primarily for sale, for rent or to hold for other financial or investment purposes.
“They (investment buyers) understand that this is the mother of all buyer’s markets, and won’t last forever. The prospect of making a profit by flipping these properties is still rather distant, so they lay in wait for an eventual rebound and in the meantime make money by renting out their properties for more than the monthly mortgage payment,” chief economist RBC Global Asset Management Inc. continued.
Whether you are a first-time home buyer, first-time home seller, empty nester, thinking about selling a home or buying a home, do contact the Guldi Real Estate Group. In Southern Maryland, the Guldi Group is the number one real estate team.