Do you know a prospective buyer who is still analyzing the market and sitting on the fence? Help them out by sharing a recent article in The Wall Street Journal, simply entitled, “It’s Time to Buy That House.” The facts are presented by columnist Jack Hough of Smart Money.com who rounds out his analysis with this conclusion: “when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”
Key points include: 1) the nation’s ratio of house prices to yearly rents is nearly restored to its pre-bubble average and 2) when mortgage rates are taken into consideration, houses are the most affordable they have been in decades. These and other factors have created a perfect opportunity in many markets for homeownership whether as owner occupant or investor.
All real estate is local and some markets are more attractive than others. Ten “Sweet Deal” markets are listed in the article along with their price/rent ratios. (Single digits suggest big value.)
The article also provides quick price/rent ratios and “back-of-the-envelope ways” to help buyers determine which markets and which properties are the best investments compared to yields from other assets.
The writer encourages due diligence, but not analysis paralysis. The analysis includes input from Yale economist Robert Shiller, Moody’s Analytics, Standard & Poor’s 500-stock index and The National Association of Realtors® Housing Affordability Index.
Overall, it’s a balanced look at the potential risks and rewards of buying real estate now.
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