According to a recent article in Fortune magazine, the answer is Yes! Shawn Tully, in an article entitled "The Return of Real Estate" in the April 11, 2011 edition of Fortune, calls real estate "The most attractive asset class in America." The article focuses on the shortage of new home construction but he also points out how that shortage is a benefit to everyone in real estate. In an article in The Costco Connection, Karen Haywood Queen starts her article ("What's up with real estate?", April, 2011) with "Since interest rates are creeping up, now may be a good time to sell or buy a home." She notes that there are lots of good reasons to buy - rates are still low, seller's are motivated, prices are flat and there's a decent selection of properties to choose from.
What does Shawn Tully base his opinion on? In 2004 he looked at the cost of owning vs. renting a home and the level of new construction; at that time he concluded that there was a bubble in real estate (and turned out to be right). Now he is looking at those same factors and is saying "Housing is back." He says that the bubble and subsequent crash pushed people to rent instead of buy, but now, in many areas, the cost of buying is less than the cost of renting and former renters are purchasing.
Tully notes there are two types of markets - foreclosure markets and non-distressed markets. Foreclosure markets are in areas like Las Vegas, Phoenix and Miami. These markets have more inventory problems than other areas, however, there are more investors in these markets and fewer newer homes; Tully doesn't think the continued foreclosures (estimated to be about one million per year for the next two years) will be an issue because most of those homes are being bought and converted to rentals, as the rental market still continues to be strong; as Tully points out, all those people who have been foreclosed upon still need someplace to live.
Non-distressed markets include our own area, places where there are fewer homes on the market and the inventory of resale homes is close to seven months, which is considered to be a strong market. In a recent appraisal done in our area, the appraiser found that we have about seven and a half months worth of inventory and that our market is increasing. In areas like ours we are likely to find home prices rising alongside rent prices.
Another aspect affecting sales is mortgage lending. Haywood Queen points out that mortgage lending is likely to get more difficult and restricted, also making now a good time to buy. She foresees the process getting more complicated, more time consuming and more costly. In another Fortune article, "Fixing the mortgage mess" by John Stumpf, Stumpf points out that setting up a proper secondary market is going to be key to solving the mortgage lending situation - he suggests that three things are needed. One, everyone (buyers, banks, investors) needs to be vested in the quality of the loans being made. Two, the role of the federal government needs to be "explicit" - exactly what is the federal government's role? Stumpf suggests something like the FDIC's role with banks might work. Finally, three, he would like to see "uniform underwriting and servicing standards for mortgage loans."
Overall, we are poised to see sales pick up as conditions are ripe for buyers. As Tully finished his article, so I'll finish mine: "Beat the crowd."