We all have heard so much bad news and we are sick and tired. The real estate market has been tough to say the least. Many are upside down on their mortgages and all of us have seen our total asset value decline as a result. Well there seems to be a little good news going around. I love real estate and enjoy being in the know. I like to read what the Economist are saying and many think we are on the road to recovery. I guess time will tell. From a personal standpoint, I can tell you that the activity has picked up in my area, west central Georgia. If I close the 2 properties ‘under contract’, I will have sold more property in 3 1/2 months than I did all last year. So yes, I am excited.
Here are some reasons why things seem to be getting better:
1) American families now have capacity to buy again. The percentages of income to pay back loans has decreased from 14 down to 10.5%. Many families have postponed purchases for a long time, increasingly families now can make those purchases.
2) In most cases the real estate sector helps drive and move our economy along. As your house increases in value, you fell wealthier. As a result, we like to buy and spend. Since 2007 the real estate market has provided strong headwinds against economic growth. Well, the winds seem to be shifting. Home sales are picking up and in some areas prices are increasing also.
Look at the graph above. Home starts are improving and home construction has a trickle down impact helping contractors, building suppliers, appliance sales and the list goes on and on.
3) I refer to Americans as the ‘microwave society’. We want stuff now. We don’t tolerate delayed gratification. Many families have postponed big purchasing decisions for 5 years now, for example, families are driving their cars longer. There is a lot of pinned up demand and I believe we will see folks making these big purchases.
4) Stock Market at record levels. As I mentioned before with increases in real estate values, we are now experiencing increases in our 401Ks and IRAs. We fell wealthy and as a result we will make purchases.
No one knows for sure, but I certainly hope things are getting better. Hind sight is 20-20, we will look back one day and know for sure if 2013 was the turning point!
For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at (706) 457-0090