Now that the election is behind us we can focus on some of the positive aspects of our economy and how to improve Gross Domestic Product (GDP) and jobs in both in the short and long term. In the fall I blogged about the fact we ARE better off now than we were in 2008. One area that is definitely on the move is the housing market, recovering from a recession and unscrupulous dealings on Wall Street involving the sub-prime mortgage market.
There was a time when home ownership was the American Dream and it still is for some. With today’s low rates families can get into mortgages and buy properties that are very affordable. America was losing 750,000 jobs a month in 2008 and began adding jobs monthly since the spring of 2009. It has taken a little time to take hold, but the housing market as a whole is certainly on the way up and is expected to add 1/2 % to GDP in 2013. Here in Newburyport values of homes have improved at a rate higher then the national average and other major markets are improving modestly, while some like Las Vegas and Tampa, FL where homes lost ~50% will take longer to improve.
The low mortgage rates are getting real estate investors back in the game. The combination of low rates and low values make purchasing real estate and holding it for the long term a very viable option. Over 23 years I have worked closely with many personal real estate investors who came to me and said, for example: “Stu, I am going to buy these 2 3-familiy homes in (insert city); I will improve them and flip them in less than 1 year. I expect to make a profit of (Insert Profit) on the deal.” Many of these people failed for so many different reasons. The new real estate investor today is buying and holding the investment for the long term and collecting rent instead of flipping the property.
Today, builders of homes are the most optimistic they have been since the peak of the real estate market in 2006. Many are looking to hire new construction workers and will do so in 2013. Consumer confidence rose again in October (the highest this year) and the improving job market is the leading indicator. Housing will continue to rise as long jobs are being created.
If you are a homeowner you may also be able to benefit from the low rates by looking at your debt and refinancing your home. There has never been a better time to do so, and it is great that entire generations of families are able to refinance their homes at very low fixed rates. Get the answers you need as it pertains to your particular situation.
Listen below to hear Win Damon and I chat about this topic on WNBP Radio 106.1 FM and wnbp.com
Stuart Steinberg of Eaglerock Financial, Inc. has worked with families for more than 20 years, helping them work toward their financial goals through a holistic, well rounded approach rooted in objectivity, education, and empowerment. Stu is highly regarded by clients and colleagues for his unique combination of investment, CPA and entrepreneurial experience in the high net worth market.
Sources: USNews.com, cnn.com, foxnews.com, kiplinger