This article focuses on the value of homeownership as a long-term investment. Share this news with reluctant buyers who might appreciate what economists and industry surveys have to say.
Value of homeownership keeps going up
While homes may be selling slowly in Florida, the fact remains that homes in the Sunshine State are selling, and that’s good news. As Florida economist Stan Geberer recently said in various media reports: “If we had all this excess inventory and nobody wanted to move here, you wouldn't be able to sell the homes at any price. The fact that we have underlying demand and new job growth suggests this underlying demand is sufficient to clear the excess inventory without a dramatic collapse in prices.”
This supports Realtors’ conviction that our housing market is continuing to adjust following the frenzy of the five-year record run-up in sales and prices that we experienced here in the Sunshine State, as did most of the nation.
And we’re not alone in our beliefs. Florida homeowners know that their homes remain good investments. A July survey from the University of Florida’s Bureau of Economic and Business Research found that Floridians are optimistic about housing prices, with only 5 percent of those polled saying they think their house values will fall during the next five years.
Eighty-two percent expected the value of their houses to rise, and 13 percent said they would remain the same. The median respondent expected a gain of 18 percent, or a little more than 3 percent a year. The chairman of UF’s economics department, Jonathan Hamilton, summed up the survey findings, noting that “Most of the problem in Florida right now is that we’ve had a huge amount of building and lots of speculative buying, and things are now catching up.”
For more info on the UF survey, go to:
http://news.ufl.edu/2007/08/08/housing-prices/
Another recent homeownership survey, this one for the Attorneys' Title Insurance Fund, http://www.fundhomeinfo.com/, found that most homeowners in Florida in 2007 have a favorable outlook about the direction of their property values in the coming year. Sixty-three percent of the 1,400-plus Floridians polled statewide were confident that their homes' worth would climb or at least hold steady during the next 12 months. Additionally, 58 percent agreed that now is a great time to buy a home or a condo in the Sunshine State.
Why It's a Great Time To Buy Real Estate in Florida!
Inventory: Conditions are ideal for buyers to find their dream home. Inventory is plentiful. In Florida’s three largest markets alone, more than 125,000 homes were for sale at year’s end in 2007. Even with these high inventory levels, economists predict that number will go down in 2008 – which, of course, is another great reason to buy now.
Favorable interest rates/reduced prices: Do the math. Lower rates multiply buyers’ financial power, especially now when rates are near a 40-year low. Even one/half of one percentage point difference means a buyer could save more than $1,000 per year on a median-priced home. Buyers get more home for the money, which is a perfect scenario for families looking to upsize.
Ownership trumps renting: While renting may make sense for someone who expects to move in the next year or two, ownership continues to be a wise, long-term investment. Consider these financial benefits: Deductions on your annual income tax return, locked-in payment with a fixed rate mortgage, home price appreciation if you plan to live there for a few years, and a monthly mortgage payment comparable to rent payments. House values in the past decade have risen 88 percent on a national average, according to National Association of Realtor® research.
Talking Points for NAR's "Buy Now" Campaign
Attractive, secure financing options: Having good credit and secured down-payment capital are the most sure-fire ways to get the best mortgage deal. Fixed rates are more affordable, and many federally funded programs are available for first-time homeowners, teachers and police officers. Affordable housing loan programs are back in the picture too.
Financial value to foreign buyers: International buyers benefit from the weaker U.S. dollar, multiplying their purchasing power. Buyers also appreciate the relatively low costs of Florida property compared with similar homes in their countries. According the “2007 NAR Profile of International Home Buying Activity Study,” Florida accounted for 26 percent of all international purchases.
NAR's 2007 Profile of International Home Buying Activity
Location/lifestyle. With the extensive inventories in urban and suburban locales, buyers can live closer to work, schools and rapid transit lines. First-time homebuyers also have many affordable options in the town home and condo markets. And let’s not forget Florida’s climate, world-class beaches, vibrant economy and diverse population.