Earth is the best investment
'The best investment on earth is earth.” Based on the performance of the real estate market during the past three years, this quotation may seem a little inaccurate. But historically, investing in real estate has brought not only financial gains but also emotional stability to our society, something that we are very much in need of at this time.
Smart buyers are viewing this time as an opportunity to make their investment in earth and for good reason. Based on the positive September sales statistics in Manatee County, which indicated that sales of single family homes rose by 6 percent from August to September of this year and by 37 percent from September of last year, there is little doubt that we have turned the corner.
Much of this activity has been generated by first time buyers taking advantage of the $8,000 buyer federal tax credit which is still in effect until the end of November, with an effort afoot to extend this deadline. Short sales and foreclosures are also offering some of the best real estate deals available. Last weekend, there was a two-day, real estate sponsored open house event with 300 properties open for inspection around the county. The push is on with the real estate community, sellers and buyers getting serious.
Investors and second home buyers are all over Anna Maria looking at properties on and off the water, previously priced out of their reach. Let’s not forget that although the financial crisis may have changed some people’s plans for retirement, there’re still 76 million baby boomers born between 1946 and 1964.
That’s a huge pool of potential buyers who want to relocate to a warmer state as they get older or who want to purchase a second home or condo as a winter getaway. And even if they're a few years away from retiring, the current favorable buying environment will unlikely be the same down the road.
There is also a growing sense that the low mortgage rates that have been available for some time may begin to tick up, makinaag it almost impossible to lock in a rate while looking for a property to purchase. Educated buyers know that the difference of 1 percent for a 30-year conventional mortgage is significant. For example, $200,000 at 6 percent will cost an extra $1,300 a year for 30 years compared to 5 percent.
Currently a 30-year conventional mortgage is hanging around the 5 percent mark, however, the application process is a lot tougher, with lenders insisting on a thorough evaluation of the property and the buyer. Larger down payments are required and condominium associations must be on good financial footing with a majority of owner occupied units before a lender will approve a mortgage.
This is, however, a good thing since it keeps the marginal buyers out of the marketplace with the potential of artificially inflating housing values, something we don’t want to live through again.
Right now we’re in the perfect storm to buy real estate, motivated sellers, low interest rates, a variety of inventory and great values. The best investment on earth is still earth. Real estate investor Louis Glickman knew that in 1957, and his words were never truer.