Monday, May 23, 2011
Tuesday, May 17, 2011
Even the Naysayers Are Saying To Buy Now!
by THE KCM CREW on MAY 17, 2011
Business School professors Eli Beracha of East Carolina University and Ken H. Johnson of Florida International University have done extensive research on which makes more sense financially: to rent or own a home. They published, Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise? In their paper, the professors do not dispute the social benefits of homeownership:
“Home ownership is touted as the “American Dream”. It is credited with enhancing wealth, increasing civic pride, improving self-esteem, crime prevention, child development, and better educational outcomes, among other benefits. This paper does not dispute any of these claims.”
What the professors were proposing is that homeownership is not a better investment strategy than renting. The first of the two major findings was:
“After setting the holding period to the average American’s tenure in a residence, renting (not buying) proves to be the superior investment strategy over most of the study period… Individuals, on average, were better off in economic terms to have rented for most of the years in the study period. This first result is strongly dependent upon fiscally disciplined individuals that, without fail, reinvest any residual savings from renting.”
Historically, people do not actually reinvest savings “without fail”. Check here for the findings of a recent study from The Joint Center for Housing Studies at Harvard.
The second major finding says it all. According to both professors Beracha and Johnson, NOW IS THE TIME TO BUY!
“(F)undamental drivers now appear to be in place that favor homeownership over renting in the near term future…
The second finding might seem unwise to many given the recent crash in the real estate markets around the country. However, rent-to-price ratios now seem to be in place along with other fundamental drivers that favor ownership over renting.”
They conclude their research paper with this sentence:
“Conditions (historically low mortgage rates and relatively low rent-to-price ratios) now seem in place to favor future purchases.”
Bottom Line
Two researchers set out to prove that homeownership is not a good financial decision. After completing that research, they have determined that now is the time to buy. What more needs to be said?
Business School professors Eli Beracha of East Carolina University and Ken H. Johnson of Florida International University have done extensive research on which makes more sense financially: to rent or own a home. They published, Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise? In their paper, the professors do not dispute the social benefits of homeownership:
“Home ownership is touted as the “American Dream”. It is credited with enhancing wealth, increasing civic pride, improving self-esteem, crime prevention, child development, and better educational outcomes, among other benefits. This paper does not dispute any of these claims.”
What the professors were proposing is that homeownership is not a better investment strategy than renting. The first of the two major findings was:
“After setting the holding period to the average American’s tenure in a residence, renting (not buying) proves to be the superior investment strategy over most of the study period… Individuals, on average, were better off in economic terms to have rented for most of the years in the study period. This first result is strongly dependent upon fiscally disciplined individuals that, without fail, reinvest any residual savings from renting.”
Historically, people do not actually reinvest savings “without fail”. Check here for the findings of a recent study from The Joint Center for Housing Studies at Harvard.
The second major finding says it all. According to both professors Beracha and Johnson, NOW IS THE TIME TO BUY!
“(F)undamental drivers now appear to be in place that favor homeownership over renting in the near term future…
The second finding might seem unwise to many given the recent crash in the real estate markets around the country. However, rent-to-price ratios now seem to be in place along with other fundamental drivers that favor ownership over renting.”
They conclude their research paper with this sentence:
“Conditions (historically low mortgage rates and relatively low rent-to-price ratios) now seem in place to favor future purchases.”
Bottom Line
Two researchers set out to prove that homeownership is not a good financial decision. After completing that research, they have determined that now is the time to buy. What more needs to be said?
Monday, May 16, 2011
S.D. home prices take slight dip in April
April home sales, prices
Sales in Southern California hit lowest point since 2008 for an April
BY LILY LEUNG
THURSDAY, MAY 12, 2011 AT 8:40 A.M.
April home prices in San Diego County fell slightly, continuing a two-year trend of median values lingering in the low- to mid- $300,000s, show stats released Thursday from DataQuick Information Systems.
The median price for all home sales slipped to $321,750 in April, down 1.1 percent from a year ago and 1 percent from March, data show. The county logged 3,277 total sales in April, decreasing 0.5 percent from a year ago but up 7 percent from March.
DataQuick researchers said the pattern of home prices trending downward or "sideways" was apparent throughout Southern California, which saw its lowest level of sales in three years for an April.
Home prices all fell in San Diego, Los Angeles, Riverside, San Bernardino and Ventura but Orange County saw no change. The same factors are playing a role in influencing the market: tight lending rules and investor infusion, the real estate research company said in its monthly report.
"The prospect of a near-term resurgence in Southern California’s housing market continued to wither last month," DataQuick's statement said.
In spring 2009, San Diego's median price for all sales ranged $290,000 to $295,000 and entered the $300,000 region in June 2009. Prices for total sales have remained in the low- to mid-$300,000 area ever since.
"It's been a bumpy landing" for the real estate market, said Mark Goldman, a real estate professor at San Diego State University.
Despite historically low interest rates -- which reached a new 2011 low this week -- would-be homebuyers are still facing higher hurdles in the lending process than what consumers went through during the height of the market, Goldman said.
What's keeping the San Diego region afloat has been job creation. But rising daily expenses, such as gasoline, is countering that, he added.
John Walsh, the president of DataQuick, weighed in on April's overview:
The market's in a rut at a time it would normally be building momentum. Two of the more likely forces that could get it going again are more robust job growth and home price reductions. At the moment, the latter appears to be the more likely short-term catalyst.
Sales in Southern California hit lowest point since 2008 for an April
BY LILY LEUNG
THURSDAY, MAY 12, 2011 AT 8:40 A.M.
April home prices in San Diego County fell slightly, continuing a two-year trend of median values lingering in the low- to mid- $300,000s, show stats released Thursday from DataQuick Information Systems.
The median price for all home sales slipped to $321,750 in April, down 1.1 percent from a year ago and 1 percent from March, data show. The county logged 3,277 total sales in April, decreasing 0.5 percent from a year ago but up 7 percent from March.
DataQuick researchers said the pattern of home prices trending downward or "sideways" was apparent throughout Southern California, which saw its lowest level of sales in three years for an April.
Home prices all fell in San Diego, Los Angeles, Riverside, San Bernardino and Ventura but Orange County saw no change. The same factors are playing a role in influencing the market: tight lending rules and investor infusion, the real estate research company said in its monthly report.
"The prospect of a near-term resurgence in Southern California’s housing market continued to wither last month," DataQuick's statement said.
In spring 2009, San Diego's median price for all sales ranged $290,000 to $295,000 and entered the $300,000 region in June 2009. Prices for total sales have remained in the low- to mid-$300,000 area ever since.
"It's been a bumpy landing" for the real estate market, said Mark Goldman, a real estate professor at San Diego State University.
Despite historically low interest rates -- which reached a new 2011 low this week -- would-be homebuyers are still facing higher hurdles in the lending process than what consumers went through during the height of the market, Goldman said.
What's keeping the San Diego region afloat has been job creation. But rising daily expenses, such as gasoline, is countering that, he added.
John Walsh, the president of DataQuick, weighed in on April's overview:
The market's in a rut at a time it would normally be building momentum. Two of the more likely forces that could get it going again are more robust job growth and home price reductions. At the moment, the latter appears to be the more likely short-term catalyst.
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