Prime Time for Real Estate

With home prices hovering about what they were in the early 2000's and mortgage rates hitting historic lows, I believe that, if you can afford to, it is time to buy! In economics, the demand of a superior good is dependent on income; as income rises the demand for a superior good rises, and as income falls the demand falls accordingly. According to the US Department of Commerce, wage and salary income increased $12.9 billion in April and $17.9 billion in March. As long as the recovery continues I believe that home prices are at their bottom and are poised for a increase in the foreseeable future. While prices will not see an increase like they did with the housing bubble, I predict that they will raise enough for it to be worth the time and risk of an investment.

I was reading an article in the Wall Street Journal a few days ago which underscored the income-demand relationship of real estate economics (http://online.wsj.com/article/SB10001424052702304821304577440473581936752.html?mod=WSJ_RealEstate_LeftTopNews). The article stated that "bigger homes are making a comeback", as well as the average home price nationwide was up from $282,600 to $269,900 in the month of April alone. The article states that the increase in demand was influenced mostly by lower mortgage rates, which can be found under 4% for a 30-year fixed rate mortgage. Also to keep in mind are that interest payments made to your mortgage lender can be tax deductible, but as with any major financial decision you should speak to a CPA to have a clear understanding on your personal finances.

Jason Berry, a friend and licensed realtor, informed me of a few opportunities to invest in real estate in Northern California. Doing some independent research, I found from Zillow.com that while home prices in Sacramento are down 4% year to date, looking from Q-4 of 2011 to Q-1 of 2012 home prices have increased 2.4%, and from April to May have increased in 4.3%. This increase in home prices signal to me that is is indeed a good time to purchase home property in that particular area. Jason provided an interesting graphic for the prices of real estate in the Sacramento area, which states that the six month median price has increased by 4.4%, and the percentage difference month to month is down just 0.6%. If any one is interested in more information about homes in the Sacramento area, I encourage you to contact Jason or find more information at http://realestatewithjason.com/.