November began with a noteworthy barrage of news and opinion on the real estate front. First out of the gate on November 1 came yahoo!finance’s Dani Romero with a singular take on “Why it may be time to buy into the slumping real estate market.” The analysis was largely inspired by price data from 20 large U.S. cities as reported by the S&P Corelogic Case-Shiller Index—but most of her findings also held more widespread implications that St. Cloud sellers should appreciate. Some of the ideas presented:

·         Homebuilder confidence has been eroding steadily and can be expected to continue. The result will ultimately contribute to the continuation of the supply shortages that have bolstered prices, tempering price erosion.

·         Inflation universally erodes value—but some savvy investors believe that real estate “has been, and will continue to be, a consistent hedge against inflation.”

·         Rental properties could be an especially attractive option for buyers because their owners “can increase rents as demand soars.”

·         Multifamily investments are even stronger inflation counters because lease rates can be reset as frequently as every 12 months (compared with 3 to 10 years for commercial properties). That appeal appears to be recognized in the marketplace, where new multifamily starts exceed historical averages.

The bottom line: “It may be time to buy as others pull back.”

Whether or not her points pan out over the long haul, another yahoo!finance.com article provided a different reason that may restrain price declines. So long as new 30-year fixed mortgage rates remain proportionally expensive, many current homeowners will feel “locked in” to their current low mortgage rates. The result should be less competition among St. Cloud sellers. 

For those most mindful of historical instances where acting “against the herd” proved farsighted, Romero’s points are likely to resonate. And there is another group that would hope that her point of view proves correct: those who simply need to buy a house for all the other traditional reasons (such as the gangbuster tax advantages that go with home ownership).

The first step to becoming a homeowner is familiarizing yourself with the current marketplace. For any St. Cloud real estate project, call me to help anytime!    

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