Can Two “Downs” Make An “Up” for Investors?

Of course, real estate is local, and this discussion is based on national trends. So, balance it with your area’s peculiarities. However, this week found two topics covered extensively in the mainstream media:

• Interest rates down again, and
• Home ownership drops to lowest level since 1998.

A lower percentage of people now own their own homes than ever in the last dozen or more years. So, one question is if there will be rising demand when prices begin to stabilize. Of course, without rising demand CAN prices stabilize?

Then there is the dilemma of amazing interest rates not seen in decades, but such stringent mortgage requirements and high down payment demands that people can’t take advantage of the situation. The facts:

Home Ownership

The ownership rate through June was 65.9%, the lowest since the same rate 13 years ago. Also in June, the sales of new U.S. homes reached a three month low of 312,000 and an annualized pace.

Mortgage Rates

Just as the budget situation was being resolved, at least for now, the 30 year fixed rate for a mortgage dropped to an average 4.45%, down from 4.57% the week before. The 15 year fixed rate plunged to a new record low of 3.52%, down from 3.67% the previous week. On Bankrate.com, one lender was quoting a 30 year fixed rate of 4.03%.

So, a lot of people aren’t in a home they own, and mortgages are about as cheap as they have ever been or will ever get. Throw in the large number of bargains out there, and we just keep waiting for the “buyer surge” that’s sure to come … we hope. Real estate investors can find opportunity in any market, and this one is no exception. As it becomes more difficult to tell if a bottom has been reached, it could be a sign that this is actually the case. Keep watching.